Introduction to Economics 1 Deneme Sınavı Sorusu #829663
If there are four projects and each has the Net Present Value (NPV) of $-1800, $0, $500 and $1500 respectively, which project should the investor choose?
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The first project because is has the highest absolute value of NPV. |
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The second project because NPV=0 means that project yields maximum orıfits. |
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Any of the projects which has a positive NPV; the value of NPV does not matter as long as it is positive. |
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The fourth project as it has the highest NPV. |
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NPV is not important when making investment decisions, so the investor can choose any of the four projects. |
When an investor has to make a decision about which investment project to choose the investor will calculate the NPV of these projects. Then, s/he will pick the project that yields the highest NPV.
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