If a Project Has an 80 Percent Probability of High

question 67

Multiple Choice

If a project has an 80 percent probability of high demand and a 20 percent probability of low demand, then the expected value of the net present value of the two different demand assumptions would give us a weighted average net present value for the project. Such an analysis is called:

• A) a sensitivity analysis.
• B) a scenario analysis.
• C) a simulation analysis.
• D) a horizontal analysis.

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Definitions:

Forest Fires

Uncontrolled fires that occur in wooded areas, which can have devastating effects on wildlife, vegetation, and human structures, often exacerbated by dry conditions and high winds.

Acres

A unit of area commonly used in the United States, equivalent to 43,560 square feet or about 4047 square meters.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, showing how much variation exists from the average.

Snowfall

Precipitation in the form of flakes of crystalline water ice, falling from clouds when air temperatures are below the freezing point of water.