The net present value (NPV) helps a company decide whether it should pursue certain investment opportunities or not. Which one of the following would be the decision criteria for a large shopping mall if the NPV is found to be 0?

Question

Answer

Reject – the initial investment amount cannot be redeemed by the cash flow of the project.

Answer

Accept – the initial investment amount can be sustained by the cash flow of the project, although no addition to the value of the business is made.

Answer

Reject – the initial investment amount can be sustained by the cash flow of the project, but no addition to the value of the business is made.

Answer

Accept – the initial investment amount and an addition to the value of the business can be sustained by the cash flow of the project.

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The net present value (NPV) helps a company decide whether it should pursue cert...

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