A firm's managers realize they cannot monitor all aspects of their projects. However, in an attempt to maximize their firm's value, the managers do want to maintain a constant focus on the most critical aspect of each project. Given this specific desire, which type of analysis should they require for each project and why? Multiple Choice Cash breakeven; to ensure the firm recoups its initial investment Accounting breakeven; to ensure each project earns its required rate of return Sensitivity analysis; to identify the key variable(s) that affect(s) a project’s profitability Financial breakeven; to ensure each project has a positive NPV Scenario analysis; to guarantee each project will be profitable

A firm's managers realize they cannot monitor all aspects of their projects. However, in an attempt to maximize their firm's value, the managers do want to maintain a constant focus on the most critical aspect of each project. Given this specific desire, which type of analysis should they require for each project and why? Multiple Choice Cash breakeven; to ensure the firm recoups its initial investment Accounting breakeven; to ensure each project earns its required rate of return Sensitivity analysis; to identify the key variable(s) that affect(s) a project’s profitability Financial breakeven; to ensure each project has a positive NPV Scenario analysis; to guarantee each project will be profitable

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

ChapterC1: Eco Products, Inc

Section: Chapter Questions

Problem jA

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A firm's managers realize they cannot monitor all aspects of their projects. However, in an attempt to maximize their firm's value, the managers do want to maintain a constant focus on the most critical aspect of each project. Given this specific desire, which type of analysis should they require for each project and why? Multiple Choice Sensitivity analysis; to identify the key variable(s) that affect(s) a project’s profitability Cash breakeven; to ensure the firm recoups its initial investment Scenario analysis; to guarantee each project will be profitable Accounting breakeven; to ensure each project earns its required rate of return Financial breakeven; to ensure each project has a positive NPV
As a financial manager,;one's goalsfor the client is to help them dothe following EXCEPT: A. Build credit by encouraging them to acquire as many loan as possible so that the firm value or the total asset of the firm will increase.B. Identify investment opportunities and determine whether these are acceptable to their risk preference.C. Determine ways to reduce non-value adding costsD. Create budgets that would enable them to determine excess or inadequacy of cash.
Customers define the scope of the project, and ultimately, project success rests in their satisfaction. True false Question -1. Successful project managers tend to adopt a hands-on approach to managing projects. True false Question - 2. In terms of commonly traded organizational currencies, being involved in a task that has a large significance and
The duration of time within which the investment made for the project will be recovered by the net returns of the project is known as а. Accounting rate of return method b. Payback period С. Net present value method d. Period of return Capital budgeting is the process of evaluating and selecting short-term investments that are consistent with the firm's goal of maximizing owners' wealth. Select one: True False
If you could only have one piece of information to help you understand the discount rate for evaluating a project at hand, which of the following would you prefer? The project has different systematic risk than the firm overall. Group of answer choices How the project's expected cash flows are effected by the overall economy The firm's credit rating The firm's cost of equity The firm's WACC
From Study Case Allied Food Products, please help with the following questions: k.) Based on common sense, how highly correlated do you think the project would be with the firm's other assets? (Give a correlation coefficient or range of coefficients, based on your judgment.) 1.) How would the correlation coefficient and the previously calculated s combine to affect the project's contribution to corporate, or within - firm, risk? Explain. m.) Based on your judgment, what do you think the project's correlation coefficient would be with respect to the general economy and thus with returns on “the market”? How would correlation with the economy affect the project's market risk? n.) Allied typically adds or subtracts 4% to its WACC to adjust for risk. After adjusting for risk, should the lemon juice project be accepted? Should any subjective risk factors be considered before the final decision is made? Explain.
Internal Rate of Return is used: a) To determine the interest rate at which benefits of a project are equivalent to its costs. b) To determine which investment to choose when one of two alternatives must be chosen. c) To determine the interest rate for an investment that yields no income. d) To choose an investment that necessary to preserve the operation of the business. e) To justify a “lost-leader” project of a strategic nature.
How can I explain these?
Which of the following statements is correct regarding the payback method? Takes account of differences in size among projects. If a project’s payback is positive, then the project should be accepted because it must have a zero NPV. Ignores cash flows beyond the payback period. Has an objective, market-determined benchmark for making decisions. Directly account for the time value of money.
Which one of these statements is correct? Accountants record sales and expenses after the related cash flows occur. The value of an investment depends on the size, timing, and risk of the investment's cash flows. Individuals tend to prefer later cash flows over current cash flows. When selecting one of two projects, managers should select the project with the higher total expected cash flow Most investors prefer greater risk over less risk.
What value would a discussion of the profitability index add to a conversation where you are trying to communicate the benefits of a positive net present value project to a firm’s general management team? (Explain clearly and in-depth.)
Which of the following theory is applicable to the following situation? A manager needs to raise funds to finance a new project and prefers to use internal financing. Group of answer choices signaling theory trade off theory MM Proposition pecking order theory