1. The technique for incorporating Risk into capital budgeting that involves the use of numbers drawn randomly from probability distributions is called a:

   	a.	Monte Carlo simulation.
   	b.	scenario analysis.
   	c.	sensitivity analysis.
   	d.	probability simulation.

2 points

QUESTION 5

1. For which of the following project types is cash flow estimation most difficult?

   	a.	Replacement
   	b.	Expansion
   	c.	New Venture
   	d.	New Market

2 points

QUESTION 6

1. The initial outlay calculation for an ____ project normally includes ____.

   	a.	asset expansion; pretax proceeds from the sale of the old asset
   	b.	asset expansion; after-tax proceeds from the sale of the old asset
   	c.	asset replacement; after-tax proceeds from the sale of the old asset
   	d.	asset replacement; pretax proceeds from the sale of the old asset