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The answer says ” The investment is financially acceptable, since the NPV>0 . The investment might become financially unacceptable, however however , if the assumptions underlying the forecast financial data were reconsided, for example, the sales forecast appears to assume constant annual demand, which is unlikely in reality. ”
I just wonder the meaning “… were reconsider” in the question. Would you mind explaning to me in detail:)What I am confused is when we occur the unexpected condition like the example mentioned , what result should we do? In my opinion, we should do like this “The investment is financially acceptable, since the NPV is positive . However, the investment might become financially unacceptable, because the assumptions underlying the forecast financial data were reconsided( the sales forecast appears to assume constant annual demand, which is unlikely in reality. )
But I am not sure.Always when we make a decision using NPV, we are making assumptions about what the future cash flows will be.
What you have typed is the same as what the examiner wrote and is fine 🙂
Thanks , in general , when I occur NPV>0, I will always think it is financially acceptable. Obviously, the solution examiner gave is perfect:)
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