The president of a large company was asked why the companywasholding onto a large amount of cash, instead of investing the cash. The reply was, "Because we see a lackof available positive NPV projects."

As if a new colleague you are mentoring who is not as knowledgeable as you about finance or accounting reads the above statement. Consider:

• Detailing for your colleague what the statement means andwhy it is important.
• Providing an example of at least one project that may have a negative NPV but be worth doing. For example, perhaps the company is posting monitors all over its office to provide employees weather, traffic, and news.

References

Bennouna, K., Meredith, G. G., & Marchant, T. (2010).Improved capital budgeting decision making: Evidence from Canada.Management Decision,48(2), 225-247