Managerial actions can appear to be inconsistent with the NPV rule because ______.
A) managers are irrational
B) markets are inefficient
C) options on real assets are difficult to value with NPV
D) Three of the above
E) Two of the above

Question

Quizplus · Accepted Answer

Options on real assets can be difficult to value using the NPV rule because traditional NPV analysis does not account for the flexibility and strategic value that real options provide.

Managerial Actions Can Appear to Be Inconsistent with the NPV