EVA Stuff

Question 1

scenario analysis

Answer 1

what if analysis

Question 2

sensitivity analysis

Answer 2

only change 1 input variable, pinpoint

Question 3

simulation analysis

Answer 3

change multiple inputs

Question 4

problem with risk forecasting methods

Answer 4

they don’t tell you what action to take

Question 5

accounting BEP

Answer 5

how many units / $ of sales to make NI = 0, good to determine project earnings

Question 6

cash BEP

Answer 6

units / $ of sales where operating CF = 0

Question 7

financial BEP

Answer 7

units / $ of sales where NPV = 0

Question 8

operating leverage implications

Answer 8

high operating leverage means harsher consequences of poor forecasting b/c not producing enough means you get hit harder w FC