Inaccurate cash flow estimates originate from several sources. The most significant of these is:
A)estimating errors made by unbiased financial analysts.
B)estimating errors made by unbiased managers in the departments proposing projects.
C)unintentionally biased estimates made by impartial financial analysts.
D)errors due to the biases of managers in the departments proposing projects.

Question

Quizplus · Accepted Answer

Biases of managers in the departments proposing projects can lead to inaccurate cash flow estimates. Since managers may have personal interest in proposing their project, they may be tempted to overestimate the benefits and underestimate the costs, resulting in flawed cash flow projections.

Inaccurate Cash Flow Estimates Originate from Several Sources