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- Forecasting risk can be defined as the possibility that _____ will lead to incorrect decisions. a. the inclusion of opportunity costs b. erosion c. errors in projected cash flows d. the exclusion of sunk costs e. net working capital costsCritically evaluate the Regret aversion influencing investment decision-making Critically evaluate the availability bias influencing investment decision-makingCommitment to prior investments escalates and makes it harder to abandon prior investments even if it may not make rational sense is called __________ . Multiple Choice sunk cost fallacy committed cost fallacy commitment cost fallacy cost abandonment fallacy
- An investment should be rejected if the IRR is Group of answer choices - equal to the required rate of return - greater than the accounting rate of return - less than the required rate of return - greater than the required rate of returnWhy is it important to identify what costs will be eliminated in the conduct of financial turnaround programExplain what is meant by the internal rate of return of an investment and discuss its relationship to the NPV of an investment. Explain the problems posed for the use of the IRR when it is necessary (i) to choose between two investments and when (ii) investments are characterised by negative net cash flows at the end of their lives. Discuss and evaluate the use of the payback period as an investment criterion.
- Capital account transactions are not affected by Select one: a. Investment diversification b. Risk c. Rate of return d. All the answers are correct e. SpeculationThis can occur when a selection among mutually exclusive alternatives is based wrongly on maximization of IRR on the total cash flow. O a. Investment errors O b. Ranking errors Ос. Incremental errors Od. Alternative errorsWhere do nothing was preferred what assumption is being made about the return generated by the univested funds?
- Which of the following is a disadvantage of the IRR project evaluation method? Select one: a. It does not take into account the time value of money. b. If there are negative cash flows after positive cash flows, there may be zero or multiple internal rates of return. c. It does not make adequate allowance for risk. d. It focuses on accounting profit rather than cash flow as the source of value.Which of the following is a disadvantage of the IRR project evaluation method? Question 5Select one: a. It does not take into account the time value of money. b. If there are negative cash flows after positive cash flows, there may be zero or multiple internal rates of return. c. It does not make adequate allowance for risk. d. It focuses on accounting profit rather than cash flow as the source of value.The following is a disadvantage of ARR investment appraisal method (select one): A. multiple or no solutions B. does not take into account time value of money C. easy to explain D. management performance is rarely evaluated based on ARR