A positive NPV indicates:

Net Present Value (NPV) is a powerful tool in capital budgeting used to assess the profitability of potential investments. The sign of the NPV provides a clear indication of a project's financial viability. The correct answer is Profitability.

• A positive NPV (C) signifies that the present value of a project's expected cash inflows exceeds the present value of its expected cash outflows, including the initial investment. This means the project is anticipated to generate more value than its cost, thereby increasing shareholder wealth and indicating profitability. Such projects are generally accepted.
• A loss (A) would be indicated by a negative NPV, suggesting the project is expected to destroy value.
• Break-even (B) is represented by an NPV of zero, meaning the project is expected to generate just enough cash flow to cover its costs and the required rate of return, but not add additional value.
• Risk (D) is incorporated into the NPV calculation through the discount rate, but a positive NPV itself indicates expected profitability *given* the assumed risk level, not risk itself.