6. The Dividend Discount Model (DDM) that assumes constant growth in dividends A) can only be used when the growth rate is less than the required return. B) is a general model that cannot always be used. C) adjusts for risk. D) all of the above. E) none of the above. 7) Any changes to a firm's projected future cash flows that are caused by adding a new project are referred to as: A) eroded cash flows. B) incremental cash flows. C) directly impacted flows. D) opportunity cash flows. E) none of the above. 8) Which of the following terms refers to the best option that was foregone when a particular investment is selected? A) Side effect B) Erosion C) Sunk cost D) Opportunity cost E) Marginal cost 9) Jamie is analyzing the estimated net present value of a project under various conditions by revising the sales quantity, sales price, and the cost estimates. This type of analysis is best described as: A) sensitivity analysis. B) erosion planning C) scenario analysis. D) benefit planning. E) opportunity evaluation. 10) The Corner Market has decided to expand its retail store by building on a vacant lot that it owns. This lot was purchased four years ago at a cost of $299,000, which the firm paid in cash. To date, the firm has spent another $38,000 on land improvements, all of which was also paid in cash. Today, the lot has a market value of $329,000. What value should be included in the analysis of the expansion project for the cost of the land? A) The sum of the cash paid to date for both the lot and the improvements. B) The original purchase price only C) The current market value of the land plus the cash paid for the improvements. D) The current market value of the land. B) Zero because the land and the improvements are already owned by the company 6. The Dividend Discount Model (DDM) that assumes constant growth in dividends A) can only be used when the growth rate is less than the required return. B) is a general model that cannot always be used. C) adjusts for risk. D) all of the above. E) none of the above. 7) Any changes to a firm's projected future cash flows that are caused by adding a new project are referred to as: A) eroded cash flows. B) incremental cash flows. C) directly impacted flows. D) opportunity cash flows. E) none of the above. 8) Which of the following terms refers to the best option that was foregone when a particular investment is selected? A) Side effect B) Erosion C) Sunk cost D) Opportunity cost E) Marginal cost 9) Jamie is analyzing the estimated net present value of a project under various conditions by revising the sales quantity, sales price, and the cost estimates. This type of analysis is best described as: A) sensitivity analysis. B) erosion planning C) scenario analysis. D) benefit planning. E) opportunity evaluation. 10) The Corner Market has decided to expand its retail store by building on a vacant lot that it owns. This lot was purchased four years ago at a cost of $299,000, which the firm paid in cash. To date, the firm has spent another $38,000 on land improvements, all of which was also paid in cash. Today, the lot has a market value of $329,000. What value should be included in the analysis of the expansion project for the cost of the land? A) The sum of the cash paid to date for both the lot and the improvements. B) The original purchase price only C) The current market value of the land plus the cash paid for the improvements. D) The current market value of the land. B) Zero because the land and the improvements are already owned by the company