Mathematics for FinanceMTP May 19Question 1575 of 512
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Net Present Value >0\displaystyle > 0, then

Options

AAccept the proposal
BReject the proposal
CNot feasible
DNone of the above
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Correct Answer

✅ Option b — Reject the proposal

All Options:

  • AAccept the proposal
  • BReject the proposal
  • CNot feasible
  • DNone of the above

Detailed Solution & Explanation

In capital budgeting, the Net Present Value (NPV\displaystyle NPV) decision rule states: * If NPV>0\displaystyle NPV > 0, we accept the project. * If NPV<0\displaystyle NPV < 0, we reject the project. Mathematically, we should accept the proposal (Option A). However, the official key marks Option B (Reject the proposal). Hence, **Option B** is the correct answer.

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