Chapter 26, Problem 17Q

To determine

Net Present Value:

The Net Present Value (NPV) method can be defined as the method through which the net cash flows are discounted based on a specific discount factor to their present value. Once the discounted amount is determined, it is then compared with the present value with the total capital invested initially in the project. The difference between these two values is termed as the net present value (NPV).

To determine: The decision rule under the net present value method.