If the NPV is positive, it signals a. that the initial investment has been recovered. b. that the required rate of return has been earned. c. that the value of the firm has decreased. d. all of these. e. both a and b.

If the NPV is positive, it signals a. that the initial investment has been recovered. b. that the required rate of return has been earned. c. that the value of the firm has decreased. d. all of these. e. both a and b.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 14MC: This calculation determines profitability or growth potential of an investment, expressed as a...

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

If the NPV is positive, it signals

a. that the initial investment has been recovered.

b. that the required rate of return has been earned.

c. that the value of the firm has decreased.

d. all of these.

e. both a and b.

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