Which of the following conditions might lead a financial manager to delay a positive NPV
Project? Assume project NPV if undertaken immediately is held constant.
A) The risk-free interest rate falls.
B) Uncertainty about future project value increases.
C) The first cash inflow generated by the project is lower than previously thought.
D) Investment required for the project increases.

Question

Quizplus · Accepted Answer

If uncertainty about future project value increases, a financial manager may choose to delay the project in order to gather more information and reduce risk. This delay may result in a lower NPV, but it could also prevent the company from making a costly mistake. The other options (A, C, D) would not typically lead a financial manager to delay a positive NPV project.

Which of the Following Conditions Might Lead a Financial Manager