Which of the following factors are subject to uncertainty in an NPV analysis?

Question

Quizplus · Accepted Answer

All three factors (future cash flows, discount rate, and initial investment) are subject to uncertainty in an NPV analysis. Future cash flows are uncertain because they are based on projections and assumptions about the future, which may not be accurate. Discount rate is uncertain because it is based on factors such as interest rates and inflation, which can change over time. Initial investment is uncertain because it may be affected by a range of factors such as construction costs, labor costs, and unforeseen delays. Therefore, all three factors are subject to uncertainty, and should be carefully considered when conducting an NPV analysis.

Which of the Following Factors Are Subject to Uncertainty in an NPV