What does a positive NPV indicate regarding a project decision?

A positive Net Present Value (NPV) indicates that the total value of the project, when considering the time value of money, exceeds the costs associated with it. This means that the benefits derived from the project will outweigh any costs incurred over the project's lifetime.

When evaluating whether to accept or reject a project, a positive NPV is a strong signal that the investment is likely to generate value for the organization. The project's cash inflows, discounted back to their present value, are greater than the cash outflows. Therefore, by choosing to proceed with a project with a positive NPV, an organization is effectively making a financial decision that aligns with wealth maximization. Accepting such projects is generally a strategy for achieving long-term growth and profitability.

In contrast to this, options that suggest rejection or that the benefits are less than the costs do not align with the concept of NPV; they imply a negative financial outcome, which does not apply when NPV is positive. Thus, a positive NPV fundamentally supports the decision to accept the project.