Quiz Ch 10 – T/F Classification of the Option to Wait as an Abandonment Option
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
True or false: The option to delay is considered a form of abandonment option.
True or false: The option to delay is considered a form of abandonment option.
True or false: Abandonment values are typically higher for tangible assets than for intangible assets.
True or false: Generally, the break-even point based on Net Present Value (NPV) is lower than the break-even point calculated using accounting profit.
True or false: Due to compounding, the inclusion of a fudge factor in the cost of capital will disproportionately penalize longer-term projects.
True or false: Higher fixed costs in projects are usually associated with lower break-even points.
True or false: Typically, when building a Monte Carlo simulation model for an investment project, potential interdependencies between variables are often disregarded.
True or false: When companies break even in accounting profit, they essentially miss out on the opportunity cost of capital for their investments.
True or false: Monte Carlo simulation aims to systematically explore every conceivable combination of variables.
True or false: Elevated fixed costs in companies are usually associated with greater degrees of operating leverage.
True or false: Monte Carlo simulation is often regarded as a more sophisticated form of scenario analysis.