Which of the Following Are Reasons to Analyse the Risk

question 107

Multiple Choice

Which of the following are reasons to analyse the risk of capital projects?

• A)The people who propose projects have a vested interest in getting them accepted.
• B)Cash flows can rarely be estimated with certainty.
• C)Many of the variables in capital budgeting analysis are highly sensitive to changes in economic conditions.
• D)All of the above.

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Definitions:

Compound Interest

Interest calculated on the initial principal of a deposit or loan, as well as on the accumulated interest of previous periods.

Cash Inflow

The movement of money into an entity, often from operations, investments, and financing, reflecting the increase in cash and cash equivalents.

Earnings Rate

The percentage of return on an investment or the rate at which a company or asset is generating income.

Internal Rate Of Return

A metric used in financial analysis to estimate the profitability of potential investments.