When managers cannot determine whether to invest now or wait until costs decrease later,the rule should be to:
A) postpone until costs reach their lowest.
B) invest now to maximize the NPV.
C) postpone until the opportunity cost reaches its lowest.
D)invest at the date that gives the highest NPV today.

Question

Quizplus · Accepted Answer

The best choice is to invest at the date that gives the highest NPV today. Waiting indefinitely for costs to decrease can lead to missed opportunities to generate income and profits, and the opportunity cost of waiting can outweigh any potential savings from lower costs. Therefore, if the decision is between investing now and waiting for costs to decrease, the best approach is to assess the NPV of the investment at the current time and invest if it generates a positive NPV.

When Managers Cannot Determine Whether to Invest Now or Wait