HW2.docx - HW 2 Material Review Questions 5 Limitations of project selection models The inputs in the project selection model never describe the full

HW2.docx - HW 2 Material Review Questions 5 Limitations of...

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HW 2: Material Review Questions: 5) Limitations of project selection models: The inputs in the project selection model never describe the full situation The outputs in project selection does not give us the expected results Managers are the decision makers and they decide values of inputs and evaluate output Project selection model is not easy to understand and requires changes Model are different for different data. Improper data will result in bad outcome. 6) Real options selection approach: Looks to create future opportunities for the organization and capitalize on it. Real options focuses on future projects for the firm and not entirely on profits. It may or may not generate profits. Used to reduce both technological and commercial risk. Profitability model: It focuses on profits and long term investment. It is model to describe about the profits of a project. It focuses on Money made as a profit and analyses future project based on that. Time value of money is not evaluated. 7) Discounted cash flow method over payback period: Payback period does not include time value of money whereas discounted cash flow takes into time value of money.
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  • Spring '14
  • KimNeedy

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