Which of the following statements regarding Net Present Valu

Which of the following statements regarding Net Present Value (NPV) is incorrect?

a. When faced with a set of alternatives, choose the one with the lowest NPV in order to minimize the preset value of costs.

b. Good projects will have a positive NPV.

c. The NPV represents the value of the project in terms of cash today.

d. The NPV of a project is the difference between the present value of its benefits and the present value of its costs.

Solution

a. When faced with a set of alternatives, choose the one with the lowest NPV in order to minimize the preset value of costs.