What is a disadvantage of expected Net Present Value (NPV)?

The selected answer identifies a key disadvantage of expected Net Present Value (NPV) by highlighting that calculating it in a single instance may not effectively capture the variability or uncertainty associated with future revenues. Expected NPV is based on forecasting future cash flows and discounting them back to present value; however, if it's computed just once, it doesn't account for the fluctuations in cash flows that may occur over time.

For instance, if a business performs an NPV analysis without considering the potential for changes in its market conditions or operational challenges, the calculation could provide a misleadingly optimistic or pessimistic view of the project's viability. By relying on a one-time calculation, the analysis may miss out on fully assessing the project's risk profile and the potential for different revenue outcomes.

In contrast, other options present features or characteristics that do not accurately showcase disadvantages associated with expected NPV. For example, stating that it guarantees achieving returns is misleading since expected NPV is fundamentally an estimation, not a guarantee of performance. Considering the spread of risk is typically seen as an advantage since it allows for the assessment of various potential scenarios. Additionally, using actual revenue figures can provide more accurate insights; however, expected NPV relies on projections rather than just actual figures, which does not represent a