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4 years ago

In risk management,what does risk evaluation involves?

Business

2 answers:

OverLord2011 [107]4 years ago

7 0

Answer:

Explanation

Risk evaluation is the identification of risks in an organisation by the management through a framework put in a place by them. In risk evaluation, the focus is to identify what constitutes risk for the business and make a qualitative and quantitative analysis of the risk, with the intention of managing those risks within the risk appetite of the organisation. Without risk evaluation, risk management will not be possible, because there will be no way for management to determine the risks inherent in their operation and how they can control them based on benefits and control involved.

sweet [91]4 years ago

3 0

Risk evaluation involves rating the risks that may happen based on the likelihood of them happening. Risk evaluation also involves rating these potential happenings based on the impact they could have on the business. Evaluating risk is a step in the creative process of risk management.

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Cash flows of two mutually exclusive projects are as follows. Project A costs $80,000 initially and will have a $15,000 salvage

Vera_Pavlovna [14]

Answer:

The correct answer is B.

Explanation:

Giving the following information:

Project A:

Costs $80,000 initially and will have a $15,000 salvage value after 3 years. The operating cost with this method will be $30,000 per year.

Project B:

The initial cost of $120,000, an operating cost of $8,000 per year, and a $40,000 salvage value after its 3-year life.

Assume the interest rate is 10% per year.

Both projects present a 3-year life cycle.

To determine which option is correct, we need to calculate the net present value using the following formula:

NPV= -Io + ∑[Cf/(1+i)^n]

Cf= cash flow

Project A:

Cf1= 30,000/1.10= 27,272.73

Cf2= 30,000/1.10^2= 24,793.39

Cf3= 45,000/1.10^3= 33,809.17

Total= 85,875.29

NPV= -80,000 + 85,875.29= 5,875.29

Because the net present value is positive, Project A should be accepted.

Project B doesn't provide income, therefore it shouldn't be accepted.

7 0

3 years ago

Marquis Company estimates that annual manufacturing overhead costs will be $900,000. Estimated annual operating activity bases a

polet [3.4K]

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7 0

3 years ago

One of two methods must be used to produce expansion anchors. Method A costs $80,000 initially and will have a $15,000 salvage v

kaheart [24]

Answer:

Method b

Explanation:

Present worth can be calculated using a financial calculator

For method A ,

Cash flow in year 0 = $80,000

Cash flow in year 1 and 2 = $30,000

Cash flow in year 3 = $30,000 - $15,000 = $15,000

I = 12%

Present worth = $141,378.23

For method B,

Cash flow in year 0 = $120,000

Cash flow in year 1 and 2 = $8, 000

Cash flow in year 3 = $8,000 - $40,000 = $-32,000

I = 12%

Present worth = $110,743.44

Method b would is chosen because it worth less.

To find the present worth using a financial calacutor:

1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.

2. After inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.

3. Press compute

4 0

4 years ago

Ross wants to invest some money that he just inherited. He found that his bank offers a savings account paying a guaranteed 3% r

LUCKY_DIMON [66]

Answer:

Explanation:

Investing usually involve a trade-off between risk and return. Thus, relative to the guaranteed 3% rate of return offered by his bank, he will need to accept a higher level of risk to earn a higher return on his money.

Option A is incorrect because investing overseas may not earn a higher return, especially if the investment is in an oversea sovereign asset. Option B is incorrect because investing in a business with a very stable and predictable rate of return will likely yield a lower or similar rate of return as the bank savings account due to its low level of risk. Option D is incorrect as engaging in illegal activities does not necessarily guarantee a higher rate of return on a consistent basis.

6 0

3 years ago

You are interested in purchasing a used car for $17,250. The dealer offers financing at a rate of 6.8% APR when the purchase is

Nastasia [14]

Answer:

The monthly payments will be $353.12

Explanation:

Financing

When a purchase is made at present value and the payment will be financed at a rate of interest i for n periods, the present value PV is

$\displaystyle PV=R\cdot \frac{1-(1+i)^{-n}}{i}$