Using the ______ Criterion You Choose the Alternative with the Highest

question 189

Multiple Choice

Using the ______ criterion you choose the alternative with the highest average payoff in the decision table.

• A)maximax
• B)equally likely
• C)maximin
• D)minimax regret

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Definitions:

Cash Flows

The sum total of monetary transfers into and away from a business, crucially impacting its solvent status.

NPV

Net Present Value, a method used in capital budgeting to evaluate the profitability of an investment or project, by calculating the difference between the present value of cash inflows and outflows.

Forecasting Risk

The potential for a significant difference between forecasted and actual results due to assumptions or model inaccuracies.

Projected Fixed Costs

Estimated costs that do not vary with the volume of output or sales, typically including expenses like rent, salaries, and insurance.