Managerial divergence from the NPV decision rule "accept all positive NPV projects" arises because ______.
A) managers' objectives can differ from those of shareholders
B) of the presence of real options
C) the NPV decision rule is not designed to maximize shareholder wealth
D) Three of the above
E) Two of the above

Question

Quizplus · Accepted Answer

Managerial divergence from the NPV decision rule can arise because managers' objectives can differ from those of shareholders (A), and because of the presence of real options (B), which can affect the timing and value of projects beyond what is captured in a simple NPV calculation.

Managerial Divergence from the NPV Decision Rule "Accept All Positive