Which of the following is not a benefit of using sensitivity analysis? A. More people can see the impact of their ideas on the project. B. The use of a spreadsheet program increases the accuracy of the projections. C. What will happen is not known in advance so a variety of options can be explored prior to making a decision. D. A well-written spreadsheet will allow for a variety of questions to be answered in a minimal amount of time

Which of the following is not a benefit of using sensitivity analysis? A. More people can see the impact of their ideas on the project. B. The use of a spreadsheet program increases the accuracy of the projections. C. What will happen is not known in advance so a variety of options can be explored prior to making a decision. D. A well-written spreadsheet will allow for a variety of questions to be answered in a minimal amount of time

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter13: Capital Budgeting: Estimating Cash Flows And Analyzing Risk

Section: Chapter Questions

Problem 6Q

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Going beyond just calculating NPV, discuss it qualitatively. What is it used for? Is it a good method; how important is it? What are the advantages of using it? On the other hand, what are some challenges or disadvantages in calculating it.
This is is used to check the effect on the recommendations of a model if the estimates turn out to be wrong (say by changing the values of the parameters). Decision analysis O Predictive analysis O What-if analysis O Break-even analysis
If we are comparing projects of unequal sizes (requiring unequal amounts of investment), screening methods like NPV are only good for deciding if a product or service is worth considering along with other valid opportunities. In that case, we have to use a ranking method after screening the projects. How do we do that? For example, you have been given the following information: (n = 3; i = 10%) How will you rank these projects? Project R Project S Project T Investment required $13,000 $59,000 $89,000 Annual net cash flows $6,000 $25,000 $43,000 99
1.How do you measure the success of a project? 2.How do you handle failure? Brainwriting is an idea generation technique where you can write down your ideas about a particular question/topic.
Can you show how the NPV for project B was calculated. Still need to understand how answer was achieved. Maybe showing formula in excel. Thanks
Briefly review the sensitivity analysis that is presented in the case exhibits. Under what circumstances is this project financially attractive? What bets were the company making when they went ahead with the project? DO NOT HAVE TO PERFORM YOUR OWN SENSITIVITY ANALYSIS. YOU ARE TO INTERPRET THE SENSITIVITY ANALYSIS THAT IS GIVEN.
6. Which of the following is NOT an advantage of using sensitivity analysis? A It identifies the impact a change in an estimate would have on the result B It gives an idea of the worst possible outcome C It shows where further investigation might be useful D It provides useful information for decision making
Please analyze. Build an Excel Model to compute the NPV of investment project I or II and make sure that the model works (allows for changes in the inputs ,updates the output-NPV-and gives the same result). Could you send with a excel files?
You do not have to start from scratch, but note, these are completely independent pro formas. They must update accordingly from the data worksheets. Plan on showing your analysis and discussing the proforma changes that occur under each new scenario and how it affects profitability. Use a formatted text box (not a comment) to explain your recommendations under each new pro forma. This will be approximately a 2-3 paragraph endeavor. Scenario One: “What if” Analysis for adding flavored ice coffees. Your client is unsure if she should sell flavored ice coffees. She thinks she can sell a coffee to every second customer and it seems to be lucrative because the coffee sells for $3.75 each and costs him only $1.60 to purchase. Unfortunately your client is afraid that he would cannibalize his soft drink sales with the coffee customers (one soft drink less for every coffee sold). It will cost him $5,250 to purchase the equipment and insurance costs would rise by another…
Which of the following is true about sensitivity analysis? O Sensitivity analysis determines which probability estimates to use in order to make the best possible decision among alternatives. O Sensitivity analysis determines which regret strategy (minimax, maximax, or maximin) should be used. O The rankings of the decision alternatives are frequently not highly sensitive to changes within a plausible range for probability estimates. O Sensitivity analysis is another term for the decision tree technique. n
Two different forecasting techniques (F1 and F2) were used to forecast demand for cases of bottled water. Actual demand and the two sets of forecasts are as follows: TTT PREDICTED DEMAND Period Demand F1 F2 1 68 63 66 75 70 67 3 70 75 70 4 74 69 69 70 73 6. 72 68 7 80 70 77 8. 78 74 84 Click here for the Excel Data File a. Compute MAD for each set of forecasts. Given your results, which forecast appears to be more accurate? (Round your answers to 2 decimal places.) MAD F1 MAD F2 rON m574 O N N NNN
What results, overall would you hope your recommendations would achieve ? What might your recommendation not be effective?