Sample Questions Ch 10 Key 
Sample Questions Ch. 10
1- The possibility that errors in projected cash flows can lead to incorrect NPV estimates is called: A) Forecasting risk. B) Projection risk. C) Scenario risk. D) Monte Carlo risk. E) Accounting risk
2- An analysis of what happens to NPV estimates when we ask what-if questions is called: A) Forecasting analysis. B) Scenario analysis. C) Sensitivity analysis. D) Simulation analysis. E) Break-even analysis
3- An analysis of what happens to NPV estimates when only one variable is changed is called: A) Forecasting analysis. B) Scenario analysis. C) Sensitivity analysis. D) Simulation analysis. E) Break-even analysis.
4- An analysis of the relation between sales volume and various measures of profitability is called: A) Forecasting analysis. B) Scenario analysis. C) Sensitivity analysis. D) Simulation analysis. E) Break-even analysis.
5- Variable costs _________________________. A) change as a function of the quantity of output produced B) (for a given time period) are constant no matter the quantity of output produced C) change as a function of the next unit of output produced D) comprise the sum total of all production expenses of the firm for some time period E) comprise the sum total of all production expenses of the firm for some time period, expressed relative to the total output produced for that same time period
6- Fixed costs __________________________. A) change as a function of the quantity of output produced B) (for a given time period) are constant no matter the quantity of output produced C) change as a function of the next unit of output produced D) comprise the sum total of all production expenses of the firm for some time period E) comprise the sum total of all production expenses of the firm for some time period, expressed relative to the total output produced for that same time period
7- The sales level that results in a project's net income exactly equal to zero is called: A)
1- The possibility that errors in projected cash flows can lead to incorrect NPV estimates is called: A) Forecasting risk. B) Projection risk. C) Scenario risk. D) Monte Carlo risk. E) Accounting risk
2- An analysis of what happens to NPV estimates when we ask what-if questions is called: A) Forecasting analysis. B) Scenario analysis. C) Sensitivity analysis. D) Simulation analysis. E) Break-even analysis
3- An analysis of what happens to NPV estimates when only one variable is changed is called: A) Forecasting analysis. B) Scenario analysis. C) Sensitivity analysis. D) Simulation analysis. E) Break-even analysis.
4- An analysis of the relation between sales volume and various measures of profitability is called: A) Forecasting analysis. B) Scenario analysis. C) Sensitivity analysis. D) Simulation analysis. E) Break-even analysis.
5- Variable costs _________________________. A) change as a function of the quantity of output produced B) (for a given time period) are constant no matter the quantity of output produced C) change as a function of the next unit of output produced D) comprise the sum total of all production expenses of the firm for some time period E) comprise the sum total of all production expenses of the firm for some time period, expressed relative to the total output produced for that same time period
6- Fixed costs __________________________. A) change as a function of the quantity of output produced B) (for a given time period) are constant no matter the quantity of output produced C) change as a function of the next unit of output produced D) comprise the sum total of all production expenses of the firm for some time period E) comprise the sum total of all production expenses of the firm for some time period, expressed relative to the total output produced for that same time period
7- The sales level that results in a project's net income exactly equal to zero is called: A)