Exam 5: Selecting Innovation Projects

In general, real-options analysis generates a larger value than discounted cash flow analysis if the magnitude of the outcome is large relative to the magnitude of the investment.

Scenario analyses provide a visual representation of decisions and their effects on outcomes, costs and risks.

What costs are independent of your level of production?

When using the analytical hierarchy process of decision making, what is the weighted average of each attribute called?

Discuss the various strategic actions that can be undertaken to manage the uncertainty associated with innovation.

What decision-making tool starts with a decision maker making pair-wise comparisons of the importance of each dimension versus another on a scale of 0 to 10?

Which tool for making decisions about innovation projects provides a representation of investments under different assumptions about key factors that influence those investments?

If you were to recalculate the net present value of a project with a higher discount rate, the resulting net present value would be higher.

What is the most important portfolio management tool?

What decision-making tool provides a way to create a probability distribution of outcomes through the use of computer software that experiments with randomly selected values of inputs?

As part of which strategic action should you minimize your investment in nonsalvageable assets?

When calculating the net present value of an innovative project and you decide to lower the discount rate, what would happen to the net present value?

Given the following information, what is the breakeven level of sales? Salary     $200,000 Fixed costs $100,000 Variable costs     $ 100 per item Sales price     $ 150 per item

What is the internal rate of return on the following income stream?

Any innovation opportunity that generates a positive financial return is worth pursuing because it adds to the companies net worth.

If you wanted to accelerate growth, in which area would you be most likely to allocate more resources?

Project maps show the placement of projects into what category?

What is the best explanation of scoring model?

Real options help to maintain flexibility and avoid committing valuable resources to infeasible alternatives.

What quantitative method for evaluating innovative projects estimates the rate of return on a project given the level of expenditure and the timing and amount of cash inflows and outflows?