What does a positive NPV indicate about an investment?

A positive NPV (Net Present Value) indicates that the present value of an investment's expected cash inflows exceeds the present value of its cash outflows. This means that the investment is expected to generate additional value over and above the costs incurred. In simpler terms, when NPV is positive, it suggests that the project or investment should deliver profits and increase the wealth of the investors or stakeholders involved.

This concept is fundamental in capital budgeting and investment decision-making because a positive NPV signifies that the returns on the investment will outpace the required rate of return, making it an attractive opportunity for investors. Hence, the correct answer reflects the understanding that investments with positive NPV are deemed favorable and indicative of profit generation.