Net present value analysis frequently ignores:
A)project risk.
B)cash flows after the first three years.
C)the time value of money.
D)some or all of a project's options.
E)start-up costs.

Question

Quizplus · Accepted Answer

Net present value analysis typically focuses on the cash flows during a project's life but can ignore options that could impact the project's value. These options may include the ability to expand or contract the project, the option to abandon it early, or the option to switch to another project. Not considering these options can lead to a less accurate estimation of a project's value.

Net Present Value Analysis Frequently Ignores