Exam 11: Project Analysis and Evaluation

Which of the following characteristics relate to the cash break-even point for a given project? I.The project never pays back. II.The IRR equals the required rate of return. III.The NPV is negative and equal to the initial cash outlay. IV.The operating cash flow is equal to the depreciation expense.

Theresa is analyzing a project that currently has a projected NPV of zero.Which of the following changes that she is considering will help that project produce a positive NPV instead? Consider each change independently. I.increase the quantity sold II.decrease the fixed leasing cost for equipment III.decrease the labor hours needed to produce one unit IV.increase the sales price

Forecasting risk is defined as the possibility that:

Which one of the following statements concerning scenario analysis is correct?

Mr.Bear,your boss,will only agree to accept a project that,as a minimum,provides a rate of return equal to the requirement he has set for the project.Given this,explain how you can use break-even analysis to ascertain which projects will be acceptable to him as you don't want to risk hearing him growl if you waste his time presenting him with a project that is unacceptable.

A project has a payback period that exactly equals the project's life.The project is operating at: