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27 August, 18:20

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 correc

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Answers (1)
  1. 27 August, 20:57
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    Option A

    Explanation:

    When you use a net present value method you are discounting the estimated cash flows of your project applying an interest rate that is related to your cost of capital. So, if your projects discounted cash flows are greater than zero it means that your project profitability is greater than your alterative project.
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