The assumption that current cash flows will be maintained if the project does not go ahead, contributes to investment in advanced technologies being rejected when using the net present value investment decision model.

Question

Quizplus · Accepted Answer

This assumption overlooks the potential for technological obsolescence and increased competition, which could diminish future cash flows if the investment in advanced technologies is not made, leading to a possible underestimation of the project's benefits when using the net present value model.

The Assumption That Current Cash Flows Will Be Maintained If