If a capital budgeting project has very uncertain cash flows, the Monte Carlo simulation technique can be used to measure its net present value (NPV) for a worst-case scenario, a best-case scenario, and a base-case scenario.
Answer the following statement true (T) or false (F)
False
Scenario analysis is used to analyze the outcomes of a project based on expected best-case scenario, worst-case scenario, and base-case scenario. The Monte Carlo simulation is used to calculate large number of outcomes for a large number of values for variables that are needed to compute the project's NPV. See 10-3: Incorporating Risk in Capital Budgeting Analysis
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Acme Global tries to be a good neighbor to the people who live and work in the cities where the organization’s plants are located. In one neighborhood, citizens asked Acme Global to identify the location of all its suppliers. When it was discovered that Acme Global used suppliers who were 1,000 miles from the plant, the citizens asked Acme Global to consider using more local suppliers. Acme Global agreed and found similar suppliers closer to its plant. This represents the influence of ______ in the external environment on the organization.
A. suppliers B. society C. technology D. competition
The activity, set of institutions, and processes for creating, capturing, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large is called
A. market segmentation. B. market positioning. C. marketing. D. market share analysis. E. marketing research.
How can investors reduce the risk associated with an investment portfolio without having to accept
a lower expected return? A) Increase the amount of money invested in the portfolio. B) Purchase a variety of securities; i.e., diversify. C) Purchase stocks that have exceptionally high standard deviations. D) Wait until the stock market rises.
In which of the following situations would you prefer to be borrowing?
A) The interest rate is 9 percent and the expected inflation rate is 7 percent. B) The interest rate is 4 percent and the expected inflation rate is 1 percent. C) The interest rate is 13 percent and the expected inflation rate is 15 percent. D) The interest rate is 25 percent and the expected inflation rate is 50 percent.