Topic 7

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7 Terms

1
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what is captial investments

Projects that cost a lot and have future benefit

2
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what is capital budgeting

process of capital investments

3
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NPV > 0 accept or reject

NPV < 0 accept or reject

Irr > Cost of Capital accept or reject

IRR < Cost of Capital accept or reject

accept

reject

accept

reject

4
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does NPV and IRR address risk and uncertinty

no

5
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what is sensitivity analysis

use estimated values to see how sensitive

6
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what is scenario analysis?

A process of analyzing future possible outcomes

7
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what is simulation analysis

how likely a certain a outcome will come true