Utilizing a decision tree the NPV used to make the decision to commence the

# Utilizing a decision tree the npv used to make the

• 46
• 85% (95) 81 out of 95 people found this document helpful

This preview shows page 26 - 28 out of 46 pages.

30.Utilizing a decision tree, the NPV used to make the decision to commence the testing for a project is dependent on: A. only the cash flows related to the actual test.B. on the path with the highest probability of occurrence.C.all project cash flows and probabilities over the project’s entire life.D. only the cash flows and probabilities of the most successful path.E. all cash flows and probabilities for only the first year of the project’s life. AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: UnderstandDifficulty: 2 IntermediateRoss - Chapter 07 #30Section: 7.4Topic: Decision trees31.In a decision tree, caution should be used in the analysis because: AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: UnderstandDifficulty: 2 IntermediateRoss - Chapter 07 #31Section: 7.4Topic: Decision trees32.Sensitivity analysis:should never be conducted if the base-case scenario results in a negative NPV.AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: UnderstandDifficulty: 2 IntermediateRoss - Chapter 07 #32Section: 7.1Topic: Sensitivity analysis33.Sensitivity analysis: AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: UnderstandDifficulty: 2 IntermediateRoss - Chapter 07 #33Section: 7.1
34.Fixed production costs are: A. directly related to labor costs.B.measured as costs per unit of time.C. measured as costs per unit of output.D. dependent on the amount of goods or services produced.E. irrelevant when conducting sensitivity analysis. AACSB: Analytical ThinkingAccessibility: Keyboard NavigationBlooms: UnderstandDifficulty: 2 IntermediateRoss - Chapter 07 #34Section: 7.1Topic: Break-even analysis