QUESTION: 25

To which technique for dealing with risk and uncertainty do ALL of the following statements apply?
· It requires that only one factor is considered at a time.

· It identifies areas which are crucial to a project, which can then be monitored if the project is chosen.

· It does not provide an indication of the likelihood of any change in the factors.

· Following the calculation, it requires the exercising of judgement to decide whether to accept or reject a project.

Sensitivity analysis
Probability analysis
Scenario analysis
Adjusting the discount rate to reflect risk.

Answer(s): A

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QUESTION: 26

A company is investing $150,000 in a project which will yield an annual cash inflow of $40,000 for eight years. The company's cost of capital is 10%.

To the nearest $100, what is the project's equivalent annual net present value?

$11,900
$7,900
$63,400
$21,300

Answer(s): A

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QUESTION: 27

An organization has carried out a risk assessment for a project.

Which of the following possible outcomes are examples of upside risk?

Select ALL that apply.

The project might be developed more quickly than expected.
The project's costs might be higher than expected.
The project's Economic Value Added might be higher than expected.
The project's environmental damage might be less than expected.
The project's payback period might be greater than expected.

Answer(s): A,C,D

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QUESTION: 28

An 80% learning curve will apply to the production of a new product. The first unit will require 120 labor hours. The labor rate is $11 per hour.

To the nearest $1, the expected total labor cost for the first 4 units is:

$3,379
$845
$5,280
$4,224

Answer(s): A

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QUESTION: 25

QUESTION: 26

QUESTION: 27

QUESTION: 28