Mathematics of FinanceMCQMTP May 19Question 1575 of 512
All Questions

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 bReject the proposal

All Options:

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

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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.

About This Chapter: Mathematics of Finance

Paper

Paper 3: Quantitative Aptitude

Weightage

12-16 Marks

Key Topics

Simple & Compound Interest, Annuity, Perpetuity

The most important mathematical chapter in the entire syllabus. It covers Simple Interest (SI), Compound Interest (CI), Nominal vs Effective rates, Present and Future Value, Annuities (Ordinary and Due), Sinking Funds, and Perpetuities. The concepts learned here are applied heavily in CA Intermediate and Final.

View Official ICAI Syllabus

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