Therefore, we apply the rule of a positive NPV means a project should be accepted. Had our new product line produced a negative NPV value, I would have suggested rejecting this project due to a possible loss of the initial investment amount.
4. If the project required additional investment in land and building, I would probably have to suggest rejecting the new product line...
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I would base this decision on the fact that the payback time is already very close to Superior's policy of maximum time for payback. If the additional investment were over $9,375, then our payback period would exceed the maximum policy time. What this tells us is that there are a number of factors that can determine whether a project is worth the investment to get it started...