Question
A potential problem with DCF analysis is that a project may appear to have a positive NPV because the estimated cash flows are Blank______.
Multiple choice question.
inaccurate
precise
correct
targeted
Multiple choice question.
inaccurate
precise
correct
targeted
Answers
GPT-4o mini
The correct answer is **inaccurate**.
A potential problem with DCF (Discounted Cash Flow) analysis is that a project may appear to have a positive NPV (Net Present Value) because the estimated cash flows are inaccurate. If the cash flow projections are overly optimistic or based on faulty assumptions, it can lead to misleading conclusions about the project's viability.
A potential problem with DCF (Discounted Cash Flow) analysis is that a project may appear to have a positive NPV (Net Present Value) because the estimated cash flows are inaccurate. If the cash flow projections are overly optimistic or based on faulty assumptions, it can lead to misleading conclusions about the project's viability.