Test on Business Risk, Information Systems, Big Data
Business Risk, Information Systems, Big Data Explained
Test: TARA Risk Management, Industry-specific Risk Management, Organisational Risk Management, Business Risk Management, Information systems management & ROI, Retail & loyalty information systems, Information Risk and Governance, School payment & security systems, Big data concepts, Big data applications in finance & accounting, Big data in supply chain & logistics, Business strategy, Risk Appetite and Decision Making, Quantitative Risk Analysis, Decision analysis with probability, Investment decision analysis, Risk and uncertainty measurement, Project Risk and Sensitivity Analysis, Sensitivity Analysis in Project Risk, Investment appraisal sensitivity, Investment appraisal methods, Decision tree methods, Project Investment and Appraisal, Ethics, Corporate reporting and sustainability
20 questions
Question 1: The Net Present Value (NPV) for the Death Canyon project, calculated using a 10% discount rate and rounded to the nearest $1,000, is $2,000,000.
A. Ano
B. Ne
Explanation: The cumulative present value of future operational cash flows is $7,472,000. The total initial investment is $5,800,000 for capital equipment and $200,000 for marketing, totaling $6,000,000. Therefore, the NPV is $7,472,000 - $6,000,000 = $1,472,000. When rounded to the nearest $1,000, the NPV is $1,472,000, not $2,000,000.
Question 2: Which of the following represents a relevant cash flow for the Death Canyon project's investment appraisal?
A. The initial investment in capital equipment of $5,800,000.
B. The marketing campaign cost of $200,000.
C. The tax allowable depreciation each year.
D. The operating cash flow pre-tax for each year.
Explanation: All listed items are relevant cash flows for the Death Canyon project. The initial investment in capital equipment and the marketing campaign are initial cash outflows. Tax allowable depreciation creates a tax shield, impacting cash flows by reducing tax payable. Operating cash flow pre-tax represents the cash generated from operations before considering the tax impact on profit, and is a key component of the project's cash inflows before tax.
Question 3: When constructing a decision tree, decision points are represented by triangles, and outcome points are represented by circles.
A. Ano
B. Ne
Explanation: The study materials state that decision trees are drawn from left to right using symbols to denote decision points (triangle) and outcome points (circle). It also explicitly mentions that when a decision is being made, it is shown as a triangle, and the outcome of a decision is shown using a circle.
Question 4: According to the study materials, which course of action provides the greatest financial benefit for Nikos's new product venture?
A. Market research and in-store promotion
B. Market research and no in-store promotion
C. No market research and in-store promotion
D. No market research and no in-store promotion
Explanation: The decision with the greatest financial benefit is to invest in market research but not incur the additional cost of the in-store promotion, yielding a net expected value of $429,952. For market research and in-store promotion, the net expected value is $247,218. For no market research and in-store promotion, the net expected value is $196,319. For no market research and no in-store promotion, the expected sales are $379,053 with no additional costs.
Question 5: Sensitivity analysis can evaluate the impact of changes in multiple variables simultaneously.
A. Ano
B. Ne
Explanation: A limitation of sensitivity analysis is that only one variable is considered at a time in isolation. To consider the impact of more than one variable changing, a scenario planning exercise should be completed.