Permanently rejecting an investment project today may not be a wise decision primarily because:
A)the size of the firm will be less than it would be with the project.
B)there are always errors in the estimation of NPVs.
C)the management team may be replaced.
D)the company is foregoing all future options.
E)the firm may not have any other investment opportunities.

Question

Quizplus · Accepted Answer

Permanently rejecting an investment project means that the company is giving up on all future options associated with that project. This could potentially limit the company's growth opportunities and reduce their ability to take advantage of new opportunities that may arise in the future. Therefore, it may be wise to keep the option to reconsider the project open, even if it is rejected for the time being. The other options (A, B, C, and E) are irrelevant to the decision of whether to permanently reject an investment project.

Permanently Rejecting an Investment Project Today May Not Be a Wise