If the Net Present Value (NPV) of a project is positive, what does this indicate?

A positive Net Present Value (NPV) indicates that the expected cash inflows from a project, discounted to their present value, are greater than the initial investment and the costs associated with the project. This means that the project is anticipated to generate more value than it consumes, leading to a financial gain.

When NPV is positive, it suggests that the project will add value to the organization and is financially viable. Investors and stakeholders typically view this as a strong signal to pursue the project because it indicates potential profitability over time. In terms of decision-making, a positive NPV often leads to a recommendation to go ahead with the investment since it implies that the present value of benefits exceeds the present value of costs.

The other options do not accurately reflect the implications of a positive NPV. Such a scenario does not indicate that pursuing the project is unwise, nor does it imply high-risk factors or an expectation of losses. Rather, it strongly suggests a favorable financial outcome.