A limitation of the net present value approach to capacity planning is that actual interest rates may be different than assumed interest rates.

Question

Quizplus · Accepted Answer

The net present value approach uses discounted cash flow analysis, which requires assumptions about future cash flows and interest rates. If actual interest rates differ significantly from these assumptions, it can affect the accuracy of the net present value calculation and thus limit the effectiveness of this approach for capacity planning.

A Limitation of the Net Present Value Approach to Capacity