A company has unlimited capital funds to invest. The decision rule for the company to follow in order to maximize shareholders' wealth is to invest…

Choice "b" is correct.

Rule: If the net present value is positive (greater than zero), a project should be accepted, unless

there is a better project. If, however, a company has unlimited funds, all projects with a net present

value greater than zero should be accepted in order to maximize shareholder wealth.

Choice "a" is incorrect. Considering only present value greater than zero accounts for future net cash

inflows, but it ignores cash outflows from the initial capital investment.

Choice "c" is incorrect. Considering only internal rate of return greater than zero may result in the

acceptance of a project with an internal rate of return less than the company's minimum desired rate

of return.

Choice "d" is incorrect. Considering only accounting rate of return greater than hurdle rate ignores

the time value of money.