In a Decision Tree,caution Should Be Used in the Analysis

question 12

Multiple Choice

In a decision tree,caution should be used in the analysis because:

• A) early stage decisions are probably riskier and should not likely use the same discount rate.
• B) if a negative NPV is actually occurring, management should opt out of the project and minimize the firm's loss.
• C) decision trees are only used for financial planning.
• D) Both early stage decisions are probably riskier and should not likely use the same discount rate; and decision trees are only used for financial planning.
• E) Both early stage decisions are probably riskier and should not likely use the same discount rate; and if a negative NPV is actually occurring, management should opt out of the project and minimize the firm's loss.

---

Definitions:

Propanal

An organic compound with the formula CH3CH2CHO, a type of aldehyde that is used as an intermediate in organic synthesis.

Butanal

An aldehyde with the formula C4H8O, it is a four-carbon chain compound with a carbonyl group attached to the first carbon.

NaOH

Sodium hydroxide, a caustic alkali commonly used in many industrial and laboratory processes, known for its strong base characteristics.

Benzophenone

An aromatic ketone with the formula C13H10O, used as a photo initiator in polymer chemistry and as a flavoring agent.