When you do not have the option to wait,it is optimal to invest in ________ project.When you have the option of deciding when to invest,it is usually optimal to invest only when ________.
A) any negative-NPV; the NPV is substantially greater than zero
B) any positive-NPV; the NPV is substantially smaller than one
C) any positive-NPV; the NPV is substantially greater than zero
D) any zero-NPV; the NPV is substantially greater than zero

Question

Quizplus · Accepted Answer

When there is no option to wait, it is always better to invest in a project with a positive NPV. However, when you can decide when to invest, it is optimal to invest only when the NPV is substantially greater than zero. This means that the benefits of the project outweigh the costs by a large margin, reducing the risk of future uncertainties or unexpected events that may affect the project's profitability. Therefore, option C is the best choice, as it highlights the importance of investing in projects with a positive NPV, but also emphasizes the need for a substantial margin of safety before making any investment decisions.

When You Do Not Have the Option to Wait,it Is