Question

The postponement of a project until conditions are more favorable: I. is a valuable option. II. is referred to as the option to extend. III. could cause a negative net present value project to become a positive net present value project. IV. will generally cause the internal rate of return for a project to decline.

Answer 1

The postponement of a project until conditions are more favorable:

III. could cause a negative net present value project to become a positive net present value project.

Step-by-step explanation:

With the favorable project conditions, the negative NPV will be revised to a positive NPV because the positive conditions will ensure the generation of positive cash inflows. The result is that the project will be assessed as acceptable since the net present value will become positive. Generally, favorable project conditions create outcomes that are positive for the cash flows, thereby generating more positive cash inflows and reducing the impact of cash outflows.