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]
GPT-4o mini
A potential problem with DCF (Discounted Cash Flow) analysis is that a project may appear to have a positive NPV because the estimated cash flows are **overly optimistic**. If the cash flows are projected too high or if assumptions underlying the estimates (such as growth rates, market demand, or cost conditions) are not realistic, it can lead to an inflated NPV, giving a misleading indication of the project's actual value and viability.