The primary reason that company projects with positive net present values are considered acceptable is that:
A) they create value for the owners of the firm.
B) the project's rate of return exceeds the rate of inflation.
C) they return the initial cash outlay within three years or less.
D) the required cash inflows exceed the actual cash inflows.
E) the investment's cost exceeds the present value of the cash inflows.

Question

Quizplus · Accepted Answer

The primary reason that projects with positive net present values are considered acceptable is that they create value for the owners of the firm. In other words, they increase the wealth of shareholders by generating future cash flows that are greater than the required initial investment. This is the fundamental objective of any investment decision, and projects that achieve this objective are typically considered acceptable. The other options are not necessarily true or relevant to the acceptability of an investment project.

The Primary Reason That Company Projects with Positive Net Present