What should occur when a project's net present value is determined to be negative?
A) The discount rate should be decreased.
B) The profitability index should be calculated.
C) The present value of the project cost should be determined.
D)The project should be rejected.

Question

Quizplus · Accepted Answer

If a project's net present value is negative, it indicates that the present value of its costs is higher than the present value of its expected cash flows. This means that the project would result in a loss of value for the company. Therefore, the best choice is to reject the project.

What Should Occur When a Project's Net Present Value Is