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You are a member of a project selection committee that uses the net present value technique. Using this approach, the project is acceptable if the______________
Correct Answer: B
Explanation/Reference: Explanation: The discounted cash-flow approach--or the present value method--determines the net present value of all cash flow by discounting it by the required rate of return. The impact of inflation can be considered. Early in the life of a project, net cash flow is likely to be negative because the major outflow is the initial investment in the project. If the project is successful, cash flow will become positive.