ECONOMICS

Detailed explanation-1: -If the calculated NPV of a project is negative (< 0), the project is expected to result in a net loss for the company. As a result, and according to the rule, the company should not pursue the project.

Detailed explanation-2: -Net Present Value (NPV) If the NPV is greater than $0, the project is accepted. Otherwise the project is rejected. The NPV is defined by its: r, which is the discount rate per period.

Detailed explanation-3: -The decision rule for NPV is to accept the project if the NPV is positive and reject the project if the NPV is NPV is negative.

Detailed explanation-4: -If the result is a positive NPV then the project is accepted. If the NPV is negative the project is rejected.

Detailed explanation-5: -If the NPV is greater than zero, the project is profitable. If the NPV is less than zero, you shouldn’t invest in the project. The point where the NPV profile crosses the horizontal axis is the discount rate which we call the internal rate of return (IRR). IRR is a discount rate at which NPV equals 0.