Which of the following makes using present value approaches in capacity decisions difficult?
A)The discount rate must be adjusted to account for inflation.
B)Some cash flows are positive and other cash flows are negative.
C)The payback period might not be long enough to justify a capacity decision.
D)Capacity decisions are made amidst much uncertainty, so cash flows cannot be estimated with great accuracy.
E)There is a cash outflow at the outset followed by, possibly, net cash inflows.

Question

Quizplus · Accepted Answer

Capacity decisions involve future cash flows that are uncertain and difficult to estimate accurately, making present value calculations challenging.

Which of the Following Makes Using Present Value Approaches in Capacity