The possibility that errors in projected cash flows can lead to incorrect NPV estimates is called:
A) Forecasting risk.
B) Projection risk.
C) Scenario risk.
D) Monte Carlo risk.
E) Accounting risk.

Question

Quizplus · Accepted Answer

Forecasting risk refers to the uncertainty in the accuracy of future cash flow projections, which directly impacts the calculation of the Net Present Value (NPV). This risk arises from the difficulty in predicting future financial performance accurately.

The Possibility That Errors in Projected Cash Flows Can Lead