As a financial person you would be concerned because marketing analyses frequently:
I. Overstate NPV by using the wrong interest rate.
II. Are biased in favor of the projects they propose and estimate unrealistic cash flows.
III. Choose projects in areas that the firm knows nothing about.
A)I, II, and III
B)II and III
C)I and III
D)I and II

Question

Quizplus · Accepted Answer

Marketing analyses can overstate NPV by using the wrong interest rate and can also be biased in favor of the projects they propose and estimate unrealistic cash flows. However, it is less likely that they would choose projects in areas that the firm knows nothing about, as they should have some understanding of the industry and consumer behavior in order to conduct a proper analysis. Therefore, option D, which includes I and II, is the best choice.

As a Financial Person You Would Be Concerned Because Marketing