80 asymmetric information refers to what asymmetric

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80. Asymmetric information refers to what? Asymmetric information refers to information that is known to some participants but not others. 81. What does “hard” capital rationing refer to? "Hard" capital rationing refers to how the maximum total expenditure is viewed, implying that under no circumstances can that maximum be exceeded. 82. What does “soft” capital rationing refer to? "Soft" capital rationing refers to when management may consider exceeding its self-imposed capital expenditure limit. The firm sets a spending limit, but depending upon project desirability
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and the firm's condition at the time decisions are actually made, the firm may over- or underspend relative to that limit. 83. What does postaudit refer to? Postaudit refers to a set of procedures for evaluating a capital budgeting decision after the fact. 84. What is the break-even point? Break-even point is an accounting term defined as the point at which the total contribution margin equals the total fixed costs of producing a product or service. At this point, total revenue equals total cost and profit equals zero. 85. What does sensitivity analysis involve? Sensitivity analysis involves varying key values in a process to determine the sensitivity of outcomes to the variation. 86. What does scenario analysis involve? Scenario analysis involves finding the profitability of a project for alternative "scenarios" where the values for the key variables are different for each scenario. 87. What does simulation involve? Simulation involves using a mathematical model to imitate a situation many times to estimate the likelihood of possible outcomes. 88. What does signaling consider? Signaling considers the actions of others and how these actions communicate information. 89 In terms of capital budgeting, what do we mean by valuable ideas? We mean we look for ideas to use as a basis for capital budgeting projects that will create value. 90. In terms of capital budgeting, what do we mean by comparative advantage? We mean we look for capital budgeting projects that use the firm’s comparative advantage to add value. 91. In terms of capital budgeting, what do we mean by incremental benefits? We mean we want to identify and estimate a project’s incremental expected future cash flows. 92. In terms of capital budgeting, what do we consider when we use the Risk-Return Trade- Off Principle? We consider the risk of the capital budgeting project when determining the project's cost of capital or required rate of return.
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93. In terms of capital budgeting, what do we mean by the Time-Value-of-Money? We refer to the measurement used to value the capital budgeting project. The NPV takes into consideration this measurement by putting everything in today’s dollars. 94. What does Two-Sided Transactions consider?
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