Flashcards
Chapter 10 Cue Cards
Cards in this deck (11)
- 1What is a capital budgetList of planned investments
- 2Forms of Capital Budgeting (directions)Bottom-up: Capital Budgeting
Top-Down: Strategic Planning - 3Define Sensitivity AnalysisAnalysis of the effects of changes in sales, costs etc on a project
- 4Define Scenario AnalysisProject analysis given a particular combination of assumptions
- 5Define Simulation AnalysisEstimating of the probabilities of different possible outcomes
- 6Define Break - Even AnalysisLevel of sales (or other variable) at which company breaks even
- 7Scenario analysis uses different but consistent combinations of variables T/FTrue
- 8Difference in accounting and NPV Break evenAccounting is when revenues = total costs (zero)
NPV is when NPV of project = zero - 9What is operating leverageDegree to which firms operating costs are fixed
- 10What is the Degree of Operating LeveragePercentage change in operating profits when sales changes by 1%
- 11What is a desirable characteristics in a project?Flexibility