Asked by Deangelo Johnson on May 09, 2024
Verified
TechnoPride aims to make a capital investment. After a careful analysis, the company finds out that the net present value (NPV) of the investment is more than zero. It is evident that TechnoPride:
A) is unlikely to make the investment.
B) is likely to make the investment.
C) is unlikely to obtain a break-even return.
D) is likely to obtain negative returns.
Net Present Value
A financial metric indicating the difference between the present value of cash inflows and the present value of cash outflows over a period of time.
- Acknowledge and evaluate the net present value (NPV) of an investment.
Verified Answer
YM
Yulissa magallonMay 10, 2024
Final Answer :
B
Explanation :
When the net present value (NPV) of an investment is more than zero, it indicates that the investment is expected to generate a return greater than the cost of capital, making it a financially viable and attractive option. Therefore, TechnoPride is likely to proceed with the investment.
Learning Objectives
- Acknowledge and evaluate the net present value (NPV) of an investment.