When a project with a negative NPV has significant intangible benefits, the annual intangible benefit required to make the investment viable should be calculated.
NPV method calculates the difference between a project's present value of cash inflows and the present value of cash outflows and is used to determine whether or not it is an appropriate capital investment.
The net present value hypothesis states that a company's earnings should logically increase as a result of investing in anything with a net present value greater than zero.
When an investor makes an investment, the shareholder's wealth should rise as a result.
Companies may also take part in initiatives with neutral NPV if they are linked to future immeasurable intangible benefits or if they allow for continuous investments.
Hence, When a project with a negative NPV has significant intangible benefits, the annual intangible benefit required to make the investment viable should be calculated.
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