chap011 - Chapter 011 Project Analysis and Evaluation...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 011 Project Analysis and Evaluation Multiple Choice Questions 1. Forecasting risk is defined as the: a. possibility that some proposed projects will be rejected. b. process of estimating future cash flows relative to a project. C . possibility that errors in projected cash flows will lead to incorrect decisions. d. process of ascertaining the incremental cash flows for a project. e. possibility that tax rates could change over the life of a project. SECTION: 11.1 TOPIC: FORECASTING RISK TYPE: DEFINITIONS 2. Scenario analysis is defined as: a. the determination of the most likely outcome for a project. B . analyzing the changes in NPV estimates when what-if questions are posed. c. isolating the effect that one variable has on the NPV of a project. d. comparing the NPV of a project both with and without considering the effects of erosion. e. determining the acceptability of a project based solely on the project's operating cash flows. SECTION: 11.2 TOPIC: SCENARIO ANALYSIS TYPE: DEFINITIONS 3. An analysis of what happens to the estimate of net present value when only one variable is changed is called _____ analysis. a. forecasting b. scenario C . sensitivity d. simulation e. break-even SECTION: 11.2 TOPIC: SENSITIVITY ANALYSIS TYPE: DEFINITIONS 11-1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Chapter 011 Project Analysis and Evaluation 4. An analysis which combines scenario analysis with sensitivity analysis is called _____ analysis. a. forecasting b. scenario c. sensitivity D . simulation e. break-even SECTION: 11.2 TOPIC: SIMULATION ANALYSIS TYPE: DEFINITIONS 5. Variable costs: A . change in direct relationship to the quantity of output produced. b. are constant in the short-run regardless of the quantity of output produced. c. reflect the change in NPV when one more unit of output is produced and sold. d. are subtracted from fixed costs to compute the contribution margin. e. are inversely related to the number of units sold. SECTION: 11.3 TOPIC: VARIABLE COSTS TYPE: DEFINITIONS 6. Fixed costs: a. change as the quantity of output produced changes. B . are constant over the short-run regardless of the quantity of output produced. c. reflect the change in a variable when one more unit of output is produced. d. are subtracted from sales to compute the contribution margin. e. can be ignored in scenario analysis since they are constant over the life of a project. SECTION: 11.3 TOPIC: FIXED COSTS TYPE: DEFINITIONS 11-2
Background image of page 2
7. The change in revenue that occurs when one more unit of output is sold is called the _____ revenue. A . marginal b. average c. total d. fixed e. variable SECTION: 11.3 TOPIC: MARGINAL REVENUE TYPE: DEFINITIONS 8. The sales level that results in a project's net income exactly equaling zero is called the _____ break-even. a. operational b. leveraged C . accounting d. cash e. financial SECTION: 11.3 TOPIC: ACCOUNTING BREAK-EVEN TYPE: DEFINITIONS 9. The sales level that results in a project's operating cash flow exactly equaling zero is called the _____ break-even. a. operational
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/23/2011 for the course ECON 202098 taught by Professor Sameer during the Spring '11 term at University of Jordan.

Page1 / 38

chap011 - Chapter 011 Project Analysis and Evaluation...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online