Jason, the Regional Manager for a Large Electronics Firm, Is

Multiple Choice

Jason, the regional manager for a large electronics firm, is trying to determine whether a new warehouse is a good investment. After working with his firm's financial managers, he concludes that the project carries a negative NPV (Net Present Value) . What should Jason do and why?

A) He should invest in the warehouse to increase profits since a negative NPV indicates that the firm needs to generate more funds to stay afloat.
B) He should not invest in the warehouse since a negative NPV means that the present value of the future cash flow does not justify the cost of the warehouse.
C) He should invest in the warehouse since a negative NPV means that the cost of financing the warehouse is within the company's budget for expenses.
D) He should not invest in the warehouse since a negative NPV means the firm doesn't have enough money to afford the investment.