Practice for final test - i Practice for final test Which...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Practice for final test i . Which of the following statements is most correct? a. The rate of depreciation will often affect operating cash flows, even though depreciation is not a cash expense. b. Corporations should fully account for sunk costs when making investment decisions. c. Corporations should not account for opportunity costs when making investment decisions. d. Externalities should not have an impact when making investment decisions. . e. Straight line depreciation rather than MACRS is generally used for capital budgeting decisions. Answer : a ii . Which of the following statements is correct? a. Sensitivity analysis is incomplete because it fails to consider the range of likely values of key variables as reflected in their probability distributions. b. In comparing two projects using sensitivity analysis, the one with the steeper lines would be considered less risky, because a small error in estimating a variable, such as unit sales, would produce only a small error in the project's NPV. c. The primary advantage of simulation analysis over scenario analysis is that scenario analysis requires a relatively powerful computer, coupled with an efficient financial planning software package, whereas simulation analysis can be
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

Practice for final test - i Practice for final test Which...

This preview shows document pages 1 - 2. Sign up to view the full document.

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