What is the key reason why a positive NPV project should be accepted?
A)The project is expected to increase shareholder value.
B)The present value of the expected cash flows equal the project's cost.
C)The firm will earn a return equal to the NPV value at the end of the project.
D)The project will have a payback period equal to its life.
E)The project's PI will be less than 1,which also indicates acceptance.

Question

Quizplus · Accepted Answer

The key reason why a positive NPV project should be accepted is that it is expected to increase shareholder value. This is because the project's expected cash flows exceed its cost, resulting in a net gain for the company. By accepting the project, the company can create value for its shareholders and potentially boost its overall financial performance.

What Is the Key Reason Why a Positive NPV Project