In using the net present value method, only projects with a zero or positive net present value are acceptable because:
A)the return from these projects equals or exceeds the cost of capital
B)a positive net present value on a particular project guarantees company profitability
C)the company will be able to pay the necessary payments on any loans secured to finance the project
D)Both A and B are correct.

Question

Quizplus · Accepted Answer

The net present value (NPV) method evaluates projects based on whether their returns exceed the cost of capital. A zero or positive NPV indicates that the project's return meets or exceeds the cost of capital, making it acceptable.

In Using the Net Present Value Method, Only Projects with a Zero