A financial manager who consistently underestimates the ___________ will tend to incorrectly reject projects that would actually create wealth for the stockholders.
A) Marginal income tax rate.
B) Initial cost of projects.
C) Future cash outlays associated with projects.
D) Required return on projects.
E) Future cash inflows associated with projects.

Question

Quizplus · Accepted Answer

Underestimating future cash inflows associated with projects would lead to undervaluing the potential returns of a project. This could result in incorrectly rejecting projects that would have been profitable and beneficial for the stockholders, as the projections would not accurately reflect the true financial benefits.

A Financial Manager Who Consistently Underestimates the ___________ Will Tend