Q447
In mutually exclusive projects, project which is selected for comparison with others must have
A.
higher net present value
AnswerB.
lower net present value
C.
zero net present value
D.
all of above
Answer: Option A
Solution
Answer: Option A
Solution:
In mutually exclusive projects, project which is selected for comparison with others must have higher net present value. A positive net present value indicates that the projected earnings generated by a project or investment - in present dollars - exceeds the anticipated costs, also in present dollars. It is assumed that an investment with a positive NPV will be profitable, and an investment with a negative NPV will result in a net loss.