In a decision tree, the NPV to make the yes/no decision is dependent on:
A)only the cash flows from successful path.
B)on the path where the probabilities add up to one.
C)all cash flows and probabilities.
D)only the cash flows and probabilities of the successful path.
E)None of the above.

Question

Quizplus · Accepted Answer

The NPV in a decision tree considers all possible cash flows and their associated probabilities to account for all potential outcomes and risks.

In a Decision Tree, the NPV to Make the Yes/no