Explain the phenomena of 'overinvestment' and 'underinvestment' in relation to a firm's investment strategy and its relationship to NPV. In each case give a reason as why a firm or its management might engage in 'overinvestment' and 'underinvestment'?

Answer rating: 100% (QA)

Overinvestment and underinvestment are phenomena in investment strategy that relate to how a firm allocates its resources and capital expenditures The... View the full answer