Define each of the following terms: a. Project cash flow; accounting income b. Incremental cash flow; sunk
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a. Project cash flow; accounting income
b. Incremental cash flow; sunk cost; opportunity cost; externality; cannibalization; expansion project; replacement project
c. Net operating working capital changes; salvage value
d. Stand-alone risk; corporate (within-firm) risk; market (beta) risk
e. Sensitivity analysis; scenario analysis; Monte Carlo simulation analysis
f. Risk-adjusted discount rate; project cost of capital
g. Decision tree; staged decision-tree analysis; decision node; branch
h. Real options; managerial options; strategic options; embedded options
i. Investment timing option; growth option; abandonment option; flexibility option
Monte Carlo simulation
Monte Carlo simulation is a technique used to understand the impact of risk and uncertainty in financial, project management, cost, and other forecasting models. A Monte Carlo simulator helps one visualize most or all of the potential outcomes to... Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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Related Book For
Corporate Finance A Focused Approach
ISBN: 978-1439078082
4th Edition
Authors: Michael C. Ehrhardt, Eugene F. Brigham
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