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 net present value. What should Jason do-and why?

A) He should not invest in the warehouse-a negative NPV means the firm doesn't have enough money to afford the investment.
B) He should invest in the warehouse-a negative NPV means that the cost of financing the warehouse is less than the cost of any other investment.
C) He should not invest in the warehouse-a negative NPV means that the present value of the positive cash flows are not high enough to justify the costs of the warehouse.
D) He should invest in the warehouse-a negative NPV indicates that failing to do so will reduce the value of the firm to its shareholders.