Sheehan Inc

question 33

Multiple Choice

Sheehan Inc.is deciding whether to invest in a project today or to postpone the decision until next year.The project has a positive expected NPV,but its cash flows might turn out to be lower than expected,in which case the NPV could be negative.No competitors are likely to invest in a similar project if the firm decides to wait.Which of the following statements best describes the issues that the firm faces when considering this investment timing option?

• A) The investment timing option would not affect the cash flows and therefore would have no impact on the project's risk.
• B) The more uncertainty about the future cash flows,the more logical it is to go ahead with this project today.
• C) Since the project has a positive expected NPV today,this means that its expected NPV will be even higher if the firm chooses to wait a year.
• D) Since the project has a positive expected NPV today,this means that it should be accepted in order to lock in that NPV.
• E) Waiting would probably reduce the project's risk.

---

Definitions:

Official Authority

The legal and formal right granted to a person or entity to make decisions and enforce those decisions within an organization or community.

Human Resource Information System (HRIS)

A software solution that helps manage people, policies, and procedures through efficient handling of HR functions like recruitment, payroll, and performance analysis.

U.S. Labor Market

The supply and demand for labor in the United States, where employers seek workers for jobs and individuals seek employment.

Multigenerational Workplace

An employment setting that includes a diverse age range of employees, from young workers to older professionals, spanning several generations.