Rejecting an investment today forever may not be a good choice because:
A)the size of the ﬁrm will decline.
B)there are always errors in the estimation of NPVs.
C)the option value is negative.
D)the company is forgoing the future rights or options to the investment.
E)None of the above.

Question

Quizplus · Accepted Answer

Rejecting an investment today means that the company is forgoing the future rights or options to the investment. This could potentially limit the company's growth or opportunities in the future, making it a costly decision in the long run. Additionally, there may be errors in the estimation of NPVs, making it difficult to accurately determine the true value of the investment. Finally, the option value of the investment may be negative today, but could potentially become positive in the future, making it important for the company to keep its options open.

Rejecting an Investment Today Forever May Not Be a Good