What Should a Firm Do to Reduce the Temptation for Planners

question 13

Multiple Choice

What should a firm do to reduce the temptation for planners to inflate their estimates of the benefits associated with the project to get it approved?

• A)conduct regular capital investment post-audits.
• B)fire all managers who miss their cost or benefit estimates by more than 10 percent.
• C)recognize that the capital budgeting process is based on subjective estimates and that managers cannot control the actual project implementation.
• D)promote project managers that have the largest project(s)or number of employees.

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Definitions:

Statistical Tests

Procedures used in statistics to determine whether there is enough evidence in a set of data to infer that a certain condition is true for the entire population.

Dependent Variable

The variable being tested and measured in an experiment, which is expected to change as a result of manipulations of the independent variable.

Reading Programs

Educational strategies or curriculums designed to improve literacy skills, including comprehension, fluency, and vocabulary.

Comprehension

The ability to understand, process, and integrate information.