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Homework answers / question archive / If a capital budgeting project has a net present value (NPV) equal to zero: a
If a capital budgeting project has a net present value (NPV) equal to zero:
a.It will not change the book value of the firm's liabilities.
b.It will not change the financial value of the firm.
c.It will not change the amount of the firm's working capital.
d.It will not change the book value of the firm's assets.
The correct option is B "It will not change the financial value of the firm".
As we know,
Net Present Value = Present Value of Cash Inflows - Initial Investment
If Net Present Value is Zero than investment in that project will not add any value to a firm.
So, the correct option is B "It will not change the financial value of the firm".
