PrinciplesofCorporateFinance英文十版习题解答Chap.docVIP

Chapter 10 - Project Analysis PAGE  10- PAGE 13 CHAPTER 10 Project Analysis Answers to Problem Sets 1. a. False b. True c. True ? 2. a. Cash-flow forecasts overstated. b. One project proposal may be ranked below another simply because cash flows are based on different forecasts. c. Project proposals may not consider strategic -alternatives. ? 3. a. Analysis of how project profitability and NPV change if different assumptions are made about sales, cost, and other key variables. b. Project NPV is recalculated by changing several inputs to new, but consistent, values. c. Determines the level of future sales at which project profitability or NPV equals zero. d. An extension of sensitivity analysis that explores all possible outcomes and weights each by its probability. e. A graphical technique for displaying possible future events and decisions taken in response to those events. f. Option to modify a project at a future date. g. The additional present value created by the -option to bail out of a project, and recover part of the initial investment, if the project performs poorly. h. The additional present value created by the -option to invest more and expand output, if a project performs well. ? 4. a. False  b. True c. True d. True e. False f. True ? 5. a. Describe how project cash flow depends on the underlying variables. b. Specify probability distributions for forecast -errors for these cash flows. c. Draw from the probability distributions to -simulate the cash flows. ? 6. a. True b. True c. False d. False ? 7. Adding a fudge factor to the discount rate pushes project analysts to submit more optimistic forecasts. 8. We assume that the idea for a new obfuscator machine originates with a plant manager in the Deconstruction Division. (Keep in mind however that, in addition to bottom-up proposals, such as the obfuscator machine proposal, top-down proposals also orig