Suppose That a Feasibility Study Done for a Project by a Consulting

question 36

Multiple Choice

Suppose that a feasibility study done for a project by a consulting company brought the following results: PW (Benefits) = $13 million
PW (Costs) = $10 million
It was mentioned in the feasibility study that there is a risk of the project's loss due to potential high inflation. How should the project manager react to these results?

• A)Terminate the project right away.
• B)Terminate the project at initiation stage.
• C)Proceed with the project to the planning stage during which the risk of inflation should be addressed.
• D)Use Monte Carlo simulation to address the risk.
• E)Look for a second opinion on feasibility study.

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Definitions:

Skimming Strategy

A pricing tactic that involves setting a high price for a new product to maximize profits from segments willing to pay more, before lowering the price over time.

Price Insensitivity

A condition where the demand for a product is unresponsive or less sensitive to changes in its price.

Product Sampling

A promotional tactic where customers are given a sample of a product for free with the goal of increasing awareness or boosting sales.

Initial Purchase

The first time a customer buys a product or service from a business, marking the beginning of the consumer-brand relationship.