If a project has a salvage value greater than zero, the salvage value will
A) have no effect on the net present value.
B) increase the net present value.
C) increase the payback period.
D) decrease the net present value.

Question

Quizplus · Accepted Answer

If a project has a salvage value greater than zero, it means that at the end of its useful life, the project will still have some value that can be realized by selling it. This will increase the net present value of the project as the salvage value can be accounted for in the cash flow projections. Therefore, option B is the correct choice.

If a Project Has a Salvage Value Greater Than Zero