What are the consequences of excessive optimism or pessimism in forecasting expected project cash flows?
What will be an ideal response?
Answer: Optimistic biases can lead to accepting projects that fall short of expectations and reduce the value of the firm. Excessive pessimism will lead to the rejection of projects, especially risky projects, that might have large NPV's and add substantial value to the business.
You might also like to view...
Capitalized interest for a constructed asset cannot exceed actual interest costs
Indicate whether the statement is true or false
Assume that factory depreciation for the year is $240,000. What problem could result from dividing that amount by 12 and assigning $20,000 in depreciation to the products made each month?
What will be an ideal response?
Barry and Larry are neighbours who often borrow tools and equipment from each other. On one occasion Barry borrowed Larry's lawnmower and forgot to return it
Two months later, Larry asked Barry to return the lawnmower and Barry told him that he was keeping in as payment for a lawnmower which he had lent Larry the previous year and which Larry's children had destroyed. Which of the following statements best describes the legal position? A) Barry has committed the tort of negligence. B) Barry has not committed any torts as he has a legal right to keep the property to make up for his loss. C) Barry has committed the tort of conversion. D) Barry has committed the tort of trespass E) The law will not help Larry to recover the lawnmower as he is responsible for making equivalent payment to Barry for the lawnmower which his children destroyed.
In a typical target marketing process, the stage of segmenting the market is immediately followed by positioning one's product or service through effective marketing strategies.
Answer the following statement true (T) or false (F)