Exam 5: Selecting Innovation Projects

What type of decision-making tool evaluates projects based on the basis of numerical calculations?

An advantage associated with discounted cash flow calculations is that they incorporate many important nonfinancial factors that influence decisions, such as the reaction of competitors, the relationship of one part of the business to another, or organizational learning.

The first step in the analytical hierarchy process is to calculate the priority vectors for each dimension.

What type of uncertainty are companies facing when they need to choose between different innovation projects based on the value that can be captured from successful innovation?

At a 10 percent discount rate, a project that generates $1,000,000 a year for three years would have a net present value of $2,486,852.

Explain why companies need to manage product portfolios.

Given the following information, what is the contribution margin per unit? Salary     $200,000 Fixed costs     $100,000 Variable costs $     100 per item Sales price $     150 per item

If you are evaluating projects on whether or not they meet specific criteria, what type of scoring model are you most likely using?

The internal rate of return is the discount rate that yields a net present value of zero.

Given the following stream of cash flows assuming a current discount rate of 5 percent, what is the net present value of the project?

Given the following table of dimension weights, what is the priority vector for dimension B? ‪

Options have positive value if the expected cash flow from making the investment is more than the value of maintaining the option.

The net present value estimates the rate of return on a project, given the level of expenditure and the timing and amount of cash inflows and outflows.

Qualitative decision-making tools compare projects on the basis of scales or words.

Which of the following is a way researches have identified as a strategic action to manage the uncertainty with innovation?

If the rate on U.S. treasury securities, with a term similar to your project is greater than the internal rate of return for the project, the project most likely should be undertaken.

What costs are dependent on the level of production of your good or service?

Fixed costs are costs that are independent of your level of production.

Decision trees are a way to create a probability distribution of outcomes through the use of computer software that experiments with randomly selected values of inputs.

Given the following table of dimension weights, what is the most important dimension? ‪