英文版罗斯公司理财习题答案Chap009.pdf

CHAP TER 9 RISKANALYSIS,REAL OPTIONS,AND CAPITALBUDGETING AnswerstoConceptsReview andCritical ThinkingQuestions 1. Forecasting risk is the risk that a poor decision is made because of errors in projected cash flows. Thedanger isgreatestwith anewproductbecausethecash flowsareprobablyhardertopredict. 2. With a sensitivity analysis, one variable is examined over a broad range of values.With a scenario analysis,allvariablesareexaminedfor alimitedrangeofvalues. 3. It istruethat if averagerevenueislessthan average cost,the firm islosingmoney.Thismuch ofthe statement istherefore correct.At themargin,however, accepting aproject with marginal revenue in excessofitsmarginalcostclearly actstoincreaseoperatingcash flow. 4. Fromthe shareholderperspective,thefinancialbreak-evenpoint isthemost important.Aproject can exceed the accounting and cash break-even points but still be below the financial break-even point. Thiscausesareduction in shareholder (your)wealth. 5. The project will reach the cash break-even first, the accounting break-even next and finally the financial break-even. For a project with an initial investment and sales after, this ordering will always apply. The cash break-even is achieved first since it excludes depreciation. The accounting break-even is next since it includes depreciation. Finally, the financial break-even, which includes thetimevalueofmoney,isachieved. 6. Traditional NPV analysis is often too conservative because it ignores profitable options such as the ability to expand theproject if it isprofitable,or abandon theproject if it isunprofitable.The option to alter a project when it has already been accepted has a value, which increases the NPV of the project. 7. The type of option most likely to affect the decision is the option to expand. If the country just liberalized its markets, there is likely the potential for growth. First entry into a mark