Question
WACC was used to compute the following project NPVs: Project A = $100, Project B = -$50, Project C = -$10, Project D = $40. Which projects should the firm accept?
Multiple choice question.
A and D
A, B, and C
A only
B and C
Multiple choice question.
A and D
A, B, and C
A only
B and C
Answers
GPT-4o mini
In capital budgeting, a project should generally be accepted if its Net Present Value (NPV) is greater than zero. Here are the NPVs for the projects you've provided:
- Project A: NPV = $100 (greater than 0, accept)
- Project B: NPV = -$50 (less than 0, reject)
- Project C: NPV = -$10 (less than 0, reject)
- Project D: NPV = $40 (greater than 0, accept)
Based on this analysis, the firm should accept projects **A and D**.
So the correct answer is **A and D**.
- Project A: NPV = $100 (greater than 0, accept)
- Project B: NPV = -$50 (less than 0, reject)
- Project C: NPV = -$10 (less than 0, reject)
- Project D: NPV = $40 (greater than 0, accept)
Based on this analysis, the firm should accept projects **A and D**.
So the correct answer is **A and D**.