Which of the following projects is rejected on the basis of net present value method?
A) Project A with an NPV of $5,000
B) Project B with an NPV of $(7,000)
C) Project C with an NPV of $15,000
D) Project D with an NPV of $500

Question

Quizplus · Accepted Answer

The project with a negative NPV, i.e., Project B, is rejected based on the net present value method. A negative NPV indicates that the project's costs outweigh its benefits, which means that undertaking the project would result in a loss of value for the company. Hence, Project B should be rejected. The other projects have positive NPVs, which means that they are expected to generate value for the company and should be accepted.

Which of the Following Projects Is Rejected on the Basis