Project Sigma requires an investment of $1 million and has a NPV of $10. Project
ID: 2631839 • Letter: P
Question
Project Sigma requires an investment of $1 million and has a NPV of $10. Project Delta requires an investment of $500,000 and has a NPV of $150,000. The projects involve unrelated new product lines. What is your evaluation of these two projects?
Neither project should be accepted because they might compete with one another
a. Only project Delta should be accepted. Alpha's NPV is too low for the investment.
b. The company should look at other investment criteria, not just NPV.
c. Both projects should be accepted because they have positive NPV's
Explanation / Answer
Both projects should be accepted because they have positive NPV's and the projects involve unrelated new product lines.
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