Answered: Calculate the Risk Exposure rating with…

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter26: Capital Budgeting (capbud)

Section: Chapter Questions

Problem 5R

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Scenario (apply your knowledge)

If the product fails its validation and verification test, the team estimates it will need another design interaction to fix the problem. The team also believes it will take two weeks to execute the design changes and re-release the documentation, eight weeks to procure parts, and another two weeks to assemble the product and repeat the testing.

Total impact = 12 weeks

Next the team needs to consider the possibility that the risk will materialize. In this scenario, we estimate that possibility of failure is 25%.

Calculate the Risk Exposure rating with the help of information provided in the scenario

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