For a single, independent project, the standard decision rule is to:

Question

BlackTom AI · Accepted Answer

Net Present Value (NPV) is computed as Σ (CF_t / (1 + r)^t) − initial investment, and for an independent project the standard decision rule compares this NPV to zero.

1) Relevant knowledge points and concepts
- Time value of money: future cash flows must be discounted to present value using an appropriate discount rate r. 
- NPV measures the net increase in firm value from undertaking a project. 
- Independent project: the acceptance or rejection does not affect other investment opportunities. 
- Decision rule: accept if NPV > 0, reject if NPV < 0; if NPV = 0 the firm is indifferent (project earns exactly the required return).

2) Step-by-step reasoning process
- Estimate all future project cash flows CF1, CF2, …, CFn and the initial outlay CF0 (usually negative).
- Choose the appropriate discount rate r (cost of capital or required return).
- Discount each future cash flow: PV(CFt) = CFt / (1 + r)^t.
- Sum the discounted cash flows and subtract the initial outlay to get NPV.
- Compare NPV to zero: positive → accept, negative → reject.

3) Example with intermediate calculations
Suppose initial investment = $100, CF1 = $60, CF2 = $60, r = 10%.
PV(CF1) = 60 / 1.10 = 54.545
PV(CF2) = 60 / (1.10)^2 = 60 / 1.21 = 49.587
Sum PVs = 54.545 + 49.587 = 104.132
NPV = 104.132 − 100 = 4.132 (positive) → accept the project.
If CFs were lower so that sum PVs = 95, NPV = −5 → reject.

4) Why the correct answer is correct
A positive NPV means discounted inflows exceed the cost, so the project adds value and increases owner wealth. For independent projects, each project should be evaluated on this criterion because accepting any positive-NPV project is value-enhancing.

5) Why the other options are incorrect
- “Accept only if NPV is exactly zero”: incorrect — NPV = 0 is a break-even outcome; the firm is indifferent but wouldn’t restrict acceptance only to zero-NPV projects. 
- “Accept if revenues exceed costs in the first year”: ignores time value of money and cash flows in subsequent periods; one-year revenue dominance is not a correct financial criterion. 
- “Accept only if it has the highest IRR among all alternatives”: IRR ranking matters for mutually exclusive projects, not for a single independent project; IRR can be misleading with different project scales or unconventional cash flows, whereas NPV directly measures value added.

6) Conclusion
Therefore, for a single independent project the correct rule is: Accept the project if its NPV is positive; reject it if its NPV is negative — which matches the provided answer.

For a single, independent project, the standard decision rule is to:单项选择题

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