Answer: Noting down of ideas
Explanation: Cedric could note down the ideas and points he remembers on the back of his test booklet. He should first read the question and make short notes of every point he remembers regarding that question.
This strategy will help Cedric to answer the questions while doing the final writing in answer sheet. By doing this he can also improve his speed with accuracy while answering.
Answer:
b. helps identify the variable within a project that presents the greatest forecasting risk.
Explanation:
Sensitivity analysis refer to the financial model that measures how the variable i.e. target one should be impacted and depend on the change in the other variable that we called as an input variable
In this, it would help to identify the variable that lies within the project and provide the high risk of forecasting
Therefore the option b is correct
Answer:
Explanation:
If a company(Marriott in this case) uses a single hurdle rate to decide whether an investment should be undertaken or not, some projects that need to be accepted would end up being rejected and vice versa. For example,
if Marriott's hurdle rate is 10% and it's evaluating
project A with a 15% cost of capital &
project B with a 6% cost of capital .
Evaluation:
Project A would probably lead to a negative NPV because the cost of capital is higher (meaning it is riskier than the firm) hence could be rejected, but using the company hurdle rate of 10% to evaluate it could make its NPV positive. This would ignore the actual additional risk of the project.
