The net present value decision rule is: When an asset's expected cash flows are discounted at the required rate and yield a positive net present value, the asset should be acquired.

Question

Quizplus · Accepted Answer

This is the correct definition of the net present value decision rule. If the asset's discounted cash flows are positive and higher than the acquisition cost, it is a profitable investment and should be acquired. If the NPV is negative, the investment should be rejected.

The Net Present Value Decision Rule Is: When an Asset's