To best understand a proposed positive net present value project, managers should
A)recheck all calculations.
B)assume there are no forecast errors.
C)identify sources of economic rent.
D)evaluate other similar projects the company has undertaken in the past.

Question

Quizplus · Accepted Answer

Identifying sources of economic rent, which refers to any excess returns generated beyond the minimum required rate of return, can help ensure that the project truly adds value and is not simply due to market conditions or other factors. Rechecking calculations and assuming no forecast errors can help ensure accuracy, but do not necessarily provide a full understanding of the project's value. Evaluating similar projects in the past can offer some insights, but may not be applicable if the current project is unique.

To Best Understand a Proposed Positive Net Present Value Project