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When the present value of the cash inflows exceeds the initial cost of a project, then the project should be Group of answer choices: Rejected because the internal rate of return is negative Accepted because NPV > 0 Accepted because the profitability index is less than 1

Finance Dec 05, 2020

When the present value of the cash inflows exceeds the initial cost of a project, then the project should be

Group of answer choices:

Rejected because the internal rate of return is negative

Accepted because NPV > 0

Accepted because the profitability index is less than 1.

Rejected because NPV>IRR

Expert Solution

Option b is correct

NPV is calculated as the present value of cash inflows minus the initial cost.

If present value of cash inflows exceeds initial cost, then the NPV is higher than zero and should be accepted

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