Scenario analysis is defined as the:   Multiple Choice   determination of the initial cash outlay required to implement a project.   determination of changes in NPV estimates when what-if questions are posed.   isolation of the effect that a single variable has on the NPV of a project.   separation of a project's sunk costs from its opportunity costs.   analysis of the effects that a project's terminal cash flows has on the project's NPV.

Describe the project cash-flow analysis?

Define each of the following terms:b. Incremental cash flow; sunk cost; opportunity cost; externality; cannibalization; expansion project; replacement project

Why are NPV, BCR, and IRR considered SUPERIOR indicators of Project Feasibility compared to Payback or Recoupment Period and Accounting Rates of Return? Explain briefly.

Net Present Value Method Net present value (NPV) is one method that can be used to evaluate the financial viability of potential projects. It determines the present value of all future cash flows associated with potential projects and measures this against the cost of the project. To use net present value, a required rate of return must be defined. The required rate of return is the minimum -v acceptable rate of return that an investment must yield for it to make sense economically. Managers often choose a required rate of return above their cost of capital to ensure that the inherent uncertainties surrounding future cash flows is addressed. This can be risky, however, as it biases the process toward short-term projects. If the NPV is positive, then the project should be accepted - V ; if it is negative, then the project should be rejected V. Let's look at a net present value example using the present value of an ordinary annuity table. The company has a project with a 5-year life that…

Which of the following projects have conventional cash-flow streams? Select all that are conventional. A) Project A B) Project B C) Project C D) Project D

Depending on the cash flow assumption, should the project must use continuous cash flow? why?

Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows.   a. A project's NPV is found by compounding the cash inflows at the IRR to find the terminal value (TV), then discounting the TV at the WACC.     b. The NPV of a relatively low-risk project should be found using a relatively high WACC.     c. If a project's NPV is less than zero, then its IRR must be less than the WACC.     d. The lower the WACC used to calculate it, the lower the calculated NPV will be.     e. If a project's NPV is greater than zero, then its IRR must be less than zero.

The cost of capital represents a. the capital outlay required in a project. b. the initial investment of a project. c. the IRR of the investment. d. the minimum ROI of the investment.

Which of the following should NOT be included as a cash flow in initial, operating or terminal cash flows of a capital budgeting project? A.Opportunity Costs B.Incremental Revenues C.Sunk costs D.Relevant revenues E. Incremental Costs