A negative net present value indicates that:
A) A project's cash inﬂows must be less than the project's initial cost.
B) A project is acceptable.
C) A project's initial cash outﬂow is greater than the present value of the project's cash inﬂows.
D) The discount rate is greater than the current market rate of return.
E) The discount rate applied to the project is less than the project's internal rate of return.

Question

Quizplus · Accepted Answer

A negative net present value means that the initial cash outflow of a project is greater than the present value of the project's cash inflows. This indicates that the project is not economically viable since its cash inflows are insufficient to cover its cost.

A Negative Net Present Value Indicates That