A positive NPV forecast for a new project is reliable only if it is based on
A)forecasts of cash flows.
B)Michael Porter's theories.
C)identifiable sources of economic rents.
D)results from Monte Carlo analysis.

Question

Quizplus · Accepted Answer

A positive NPV forecast is reliable when it is based on identifiable sources of economic rents, as these indicate the project can generate returns above the normal market rate, justifying the investment.

A Positive NPV Forecast for a New Project Is Reliable