Traditionally,an NPV Analysis Assumes That Projects Will Be Accepted or Rejected,which

question 27

True/False

Traditionally,an NPV analysis assumes that projects will be accepted or rejected,which implies that they will be undertaken now or never.However,in practice,companies sometimes have a third choice--delay the decision until later,when more information will be available.Because the analysis extends out at least one additional year from the original analysis,it is unlikely that the firm would ever delay a project--particularly given the loss of the "first mover advantage."

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Definitions:

Relative Advantage

The degree to which a new product or service is perceived as better than existing alternatives by consumers.

System 1

Refers to the fast, instinctive, and emotional way of thinking, as opposed to the slower, more logical System 2.

Microsoft Windows

Microsoft Windows is a group of several proprietary graphical operating system families, developed and marketed by Microsoft.

Late Majority

A group in the diffusion of innovation model that adopts new technology or ideas after the average member of a society.