Which of the following is a reason why risk analysis is an important part of capital budgeting?
A) The people who propose projects have no vested interest in whether or not they are accepted.
B) Marketing managers are rarely excessively optimistic.
C) Project cash flows can be highly uncertain.
D) Financial analysts are rarely excessively pessimistic.

Question

Quizplus · Accepted Answer

Risk analysis is important in capital budgeting because project cash flows can be highly uncertain. It is important to consider the potential risks and uncertainties associated with a project before making a significant investment decision. This can help ensure that the company is not taking on too much risk and can make informed decisions about which projects to pursue. Options A, B, and D are not relevant to the importance of risk analysis in capital budgeting.

Which of the Following Is a Reason Why Risk Analysis