Which one of the following statements is correct?
A)Mergers benefit shareholders but not creditors.
B)Positive NPV projects will automatically benefit both creditors and shareholders.
C)Shareholders might prefer a negative NPV project over a positive NPV project.
D)Creditors prefer negative NPV projects while shareholders prefer positive NPV projects.
E)Mergers rarely affect bondholders.

Question

Quizplus · Accepted Answer

Shareholders might prefer a negative NPV project if it aligns with their risk preferences or strategic goals, despite the project not adding value in a traditional NPV sense.

Which One of the Following Statements Is Correct