Which of the following statements regarding the NPV decision rule is false?
A) Reject projects with an NPV of zero, as accepting them is equivalent to losing the present value of the projects' costs.
B) When faced with a set of alternatives, choose the one with the highest NPV.
C) Accept those projects with a positive NPV, as accepting them is equivalent to receiving their NPV in cash today.
D) Reject those projects with a negative NPV, as not doing them has NPV = 0.

Question

Quizplus · Accepted Answer

Statement A is false because a project with an NPV of zero indicates that the project's returns are exactly equal to its costs, taking the time value of money into account. Accepting such projects does not lead to a loss; it means the investment breaks even in present value terms.

Which of the Following Statements Regarding the NPV Decision Rule