Ashgate Enterprises uses the NPV method for selecting projects, and the firm doe

Question

Ashgate Enterprises uses the NPV method for selecting projects, and the firm does a reasonably good job of estimating projects' projects. Which of the following statements is most likely to describe the firm's situation? a. Ashgate probably accepts too many projects because of the failure to consider abandonment and growth sales and costs. However, Ashgate never considers real options that might be associated with b. c. d. options Real options should not have any effect on the number of projects accepted. Ashgate probably accepts too many projects because of the failure to consider investment timing options. Ashgate probably rejects too many projects because considering growth and abandonment options often increases the expected NPV

Explanation / Answer

Ashgate Enterprises is not good in forecastning future sale and cost. also company does not consider real option in project analysis. So, in this case Ashgate Enterprises probabily accept too many projects because of teh failure to consider investment timing option.

Option (C) is correct answer.

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