True or False: A negative NPV for an option indicates that the option will lose money for the supply chain.
Understand the Problem
The question is asking whether a negative Net Present Value (NPV) for an option implies monetary losses for the supply chain. Understanding NPV and its implications for investment viability is key to answering this question.
Answer
True
True. A negative NPV for an option indicates that the option will lose money for the supply chain.
Answer for screen readers
True. A negative NPV for an option indicates that the option will lose money for the supply chain.
More Information
A negative NPV suggests the investment's costs outweigh its benefits, leading to a loss for the supply chain.
Tips
Students may confuse negative NPV with other financial metrics. Remembering that NPV directly reflects the profitability of an investment helps avoid this confusion.
Sources
- True or False - Brainscape - brainscape.com
- Solved A negative NPV (net present value) for an option | Chegg.com - chegg.com
- Solved A negative NPV (net present value) for an option | Chegg.com - chegg.com
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