Using the NPV method of evaluating investments, a company should consider a project a good investment opportunity as long as the NPV of the total cash flows is positive.

Question

Quizplus · Accepted Answer

This is a correct statement. NPV (Net Present Value) method measures the value of an investment by calculating the present value of all future cash flows generated by the investment, subtracting the initial investment. If the NPV is positive, it means the investment is profitable and should be accepted. If the NPV is negative, it means the investment is not profitable and should be rejected.

Using the NPV Method of Evaluating Investments, a Company Should