A company has unlimited funds to invest at its discount rate. The company should invest in all projects having:.A) an internal rate of return greater than zero. B) a net present value greater than zero. C) a simple rate of return greater than the discount rate. D) a payback period less than the project's estimated life. Explain your choice.

The correct answer is the option B: a net present value greater than zero.

Explanation:

To begin with, when it comes to this type of terms regarding investment and discount rate it is necessary to talk about the concept known as "Capital Budgeting" that it comes from the business field and refers to the process of planning the company's long term investments regarding the buying of new machinery, new plants, products and more. Therefore that its formula seeks for the project whose net present value is greater than zero according to its discount rate as well. That is why that one of the major focus of this process is to increase the value of the assets in the company so that the shareholders are satisfy with its increase.

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