2427028
Description
Flashcards by dylan_earl, updated more than 1 year ago
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Created by dylan_earl
over 9 years ago
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| Question | Answer |
| What is a capital budget | List of planned investments |
| Forms of Capital Budgeting (directions) | Bottom-up: Capital Budgeting Top-Down: Strategic Planning |
| Define Sensitivity Analysis | Analysis of the effects of changes in sales, costs etc on a project |
| Define Scenario Analysis | Project analysis given a particular combination of assumptions |
| Define Simulation Analysis | Estimating of the probabilities of different possible outcomes |
| Define Break - Even Analysis | Level of sales (or other variable) at which company breaks even |
| Scenario analysis uses different but consistent combinations of variables T/F | True |
| Difference in accounting and NPV Break even | Accounting is when revenues = total costs (zero) NPV is when NPV of project = zero |
| What is operating leverage | Degree to which firms operating costs are fixed |
| What is the Degree of Operating Leverage | Percentage change in operating profits when sales changes by 1% |
| What is a desirable characteristics in a project? | Flexibility |
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