What investment rule states that independent capital projects should be accepted whenever their Net Present Value (NPV) is:
AEqual to Zero (NPV = 0)
BEqual to Cost of Capital
CGreater than Zero (NPV > 0)
DLess than Zero (NPV < 0)
Explanation
* Accept projects with positive Net Present Value (NPV > 0) because they add net wealth value to shareholders.
* Reject projects with negative NPV (NPV < 0).
* If NPV = 0, project yields exactly the required rate of return (WACC).
Exam Relevance
- Topic: Capital Budgeting
- Subtopic: NPV Decision Rules
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