What does a positive NPV suggest to an investor?

A positive Net Present Value (NPV) indicates that the present value of the expected cash flows from an investment exceeds the initial costs associated with that investment. This effectively means that the investment is anticipated to generate more value than it costs, which suggests that it has the potential to provide returns that exceed the investor's expectations.

Investors utilize NPV as a critical metric in decision-making processes. A positive NPV reflects that the investment not only meets but exceeds the minimum required return, suggesting an opportunity worth pursuing. This encouraging signal motivates investors to consider the investment favorably, as it implies that the project's anticipated profitability is robust.

The other possible choices imply negative or neutral outcomes, which do not align with the implications of having a positive NPV. Thus, the correct interpretation aligns with the understanding that a positive NPV represents strong potential for profitable returns.