QUESTION 10

1. A _____________________ is a graphic representation of a business project in which multiple events can have multiple outcomes.

   	a.	Timeline
   	b.	Probability distribution
   	c.	Decision Tree
   	d.	Simulation

2 points

QUESTION 11

1. The cost of capital is the appropriate discount rate in capital budgeting when:

   	a.	the projects can be ranked from riskiest to least risky.
   	b.	all the projects have less risk than the risk of the current firm.
   	c.	all the projects are equally risky.
   	d.	all the projects have the same risk as the current firm.

2 points

QUESTION 12

1. The payback period of a project is defined as:

   	a.	the number of years required for cumulative profits from a project to equal the initial outlay.
   	b.	the number of years required for the cumulative cash flows from a project to equal the average investment in the project.
   	c.	the number of years required for the cumulative cash flows from a project to equal the initial outlay.
   	d.	a period of time sufficient to earn a rate of return equal to the firm's cost of capital.