If the net present value for a project is positive, which of the following is true?
A) the project should be accepted because its expected rate of return is greater than the cost of capital
B) its internal rate of return is more than its cost of capital
C) its expected rate of return is below the required rate of return
D) its internal rate of return is less than its cost of capital

Question

Quizplus · Accepted Answer

A positive net present value indicates that the project's expected cash inflows are greater than its expected cash outflows, resulting in a profit. Therefore, the project's expected rate of return is greater than the cost of capital, making it a profitable investment that should be accepted.

If the Net Present Value for a Project Is Positive