 |  Fundamentals of Corporate Finance, 4/e Stephen A. Ross,
Massachusetts Institute of Technology
Randolph W. Westerfield,
University of Southern California
Bradford D. Jordan,
University of Kentucky
Gordon S. Roberts,
York University
Project Analysis and Evaluation
Learning ObjectivesAfter studying this chapter in the textbook, you should be able to:
| Define the term forecasting risk and explain why it is important in a discounted cash flow analysis. |
| | | | Explain what scenario analysis is and be able to use this tool as an aid in making better capital budgeting decisions. |
| | | | Explain why sensitivity analysis is important in capital budgeting. |
| | | | Explain what simulation analysis is as well as its relationship to scenario and sensitivity analyses. |
| | | | Perform break-even analyses according to the accounting, cash flow and financial approaches. |
| | | | Clearly distinguish between the various break-even analyses in terms of their respective strengths and limitations. |
| | | | Define, compute and discuss the importance of operating leverage. |
| | | | List the key managerial options associated with the majority of capital projects and explain why they may be important in making better capital budgeting decisions. |
| | | | Define capital rationing and discuss its two basic forms. |
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2002 McGraw-Hill Higher Education