Which One of These Criticisms Applies to Net Present Value

question 51

Multiple Choice

Which one of these criticisms applies to net present value analysis?

• A)Net present value is too nearsighted.
• B)Net present value analysis cannot be integrated with sensitivity analysis.
• C)Real options cannot be included in net present value analysis.
• D)Managers may acquire a false sense of security based on a project's net present value.
• E)Net present value analysis cannot be integrated with scenario analysis.

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Definitions:

CEO

Chief Executive Officer, the highest-ranking person in a company or organization, responsible for making major corporate decisions.

Rational Choice

is a theoretical framework that assumes individuals make decisions by considering the potential costs and benefits of different options to maximize their advantage.

Decision Making

The process of selecting the best course of action from several alternatives to achieve a specific goal.

Product-Development Activities

The series of tasks involved in designing, creating, and bringing a new product to market.