The Overall Modeling Process Typically Done in the Business World

question 7

True/False

The overall modeling process typically done in the business world always require seven steps: define the problem,collect and summarize data,develop a model,verify the model,select one or more suitable decisions,present the results to the organization,and implement the model and update it over time.

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Definitions:

Investment

The action or process of investing money for profit or material result.

Internal Rate of Return

The discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero, used in capital budgeting.

Independent Projects

Projects in a company that can be selected or rejected independently of one another, without affecting the profitability or potential of other projects.

Conventional Cash Flows

A series of net income figures expected to be generated by an investment, starting with a negative cash flow at the beginning (investment outlay), followed by a series of positive cash flows.