What should occur when a Project's net present value is determined to be negative?
A)the discount rate should be decreased.
B)the profitability index should be calculated.
C)the present value of the project cost should be determined.
D)the project should be rejected.

Question

Quizplus · Accepted Answer

If a project's net present value is negative, it means that the project's expected cash inflows are not sufficient to cover the initial investment and generate a positive return. In this case, it's best to reject the project as it would lead to a loss. The other options such as decreasing the discount rate, calculating the profitability index, or determining the present value of the project cost won't change the fact that the project is not profitable.

What Should Occur When a Project's Net Present Value Is