Decision Trees

question 72

Multiple Choice

Decision trees:

• A) are an alternative to NPV analysis.
• B) recognize that managers may need to react to unexpected future events.
• C) are a way to adjust the discount rate to allow for uncertainty.
• D) lay out the different steps in preparing the capital budget.

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Definitions:

Preceding Activity

An action or task that must be completed before another specific activity or task can commence.

Probable Time

An estimate of the most likely amount of time required to complete a task or project, considering possible delays and unforeseen obstacles.

Pessimistic Time

The maximum possible time that a task or project phase is expected to take, assuming worst-case scenarios.