In which area will analysts will likely err when making capital investment decisions?

Question

Quizplus · Accepted Answer

Analysts may make errors in any or all of the areas listed. Estimating future cash flows is difficult and uncertain, and even small errors can have a significant impact on the net present value of a project. Timing of cash flows can also be difficult to predict, particularly in industries where market conditions may change quickly or regulatory environments may shift. Finally, selecting an appropriate discount rate is critical to accurately assessing the value of a potential investment, and analysts may have difficulty determining an appropriate rate given the inherent uncertainties of the investment.

In Which Area Will Analysts Will Likely Err When Making