Should companies completely avoid high-risk projects?

Q: What happens if economic engineers invest too much in assets?

A: Economic engineers always combine finance with engineering and develop various models to deal with…

Q: Is the project viable or not? Suggest reasons

A: The viability of a project is examined in a feasibility study to ascertain the likelihood of…

Q: If a company has an option to abandon a project, would this tend to makethe company more or less…

A: Introduction: Abandonment option is referred as those investment opportunities that are left to the…

Q: Why do you think CFOs tend to look at strategic concerns before they look at the NPV of a project?…

A: a.    CFOs tend to look at strategic concerns before they look at the NPV of a project, Because the…

Q: What are the sources of risk associated with project development?

A: Variations in returns of an investment from its expected returns are called risk. The risk of an…

Q: How does the Broader Diversification Reduce Risk?

A: Portfolio is a pool of different investments/assets. Investors can categorize the risks in two…

Q: Which of the following contributes positively to the value of a real option to delay investment?…

A: Real option:A real option is a selection made open to a firm's managers on prospects for business…

Q: Discuss how diversification reduces firm specific risk.

A: Diversification is investing money in many investments rather than a single investment. In…

Q: Stakeholder involvement is very crucial in the EIA. Then What challenges will the project face if…

A: EIA (Environmental Impact Assessment) is referred as the process or procedure for evaluation of an…

Q: Why there are some companies invest so much capital in a project with so many risks? What are the…

A: organisation are there to execute projects and projects involved risk and without risk no profit is…

Q: How can we reduce investment risks by asset diversification?

A: Answer: Diversification is nothing but the strategy that reduces the risk by allocating assets to…

Q: Should companies completely avoid high-risk projects? Explain.

A: A huge-risk venture is one that has either a tall rate possibility of capital misfortune or…

Q: what does it mean if the npv and irr are both negative quora, should the company invest in the…

A: Capital Budgeting entails long-term planning and monitoring of capital expenditures, as well as a…

Q: What alternatives do companies have for evaluating alternative projects or investments?

A: Capital Budgeting Techniques helps to decide the investment project that should be selected.

Q: is this statement true or false? and why?  Requiring a relative short pay-back period for projects…

A: Payback Period: It is a method used in capital budgeting to determine the period in which the…

Q: what does it mean if the NPV and IRR are both positive, should the company invest on the project or…

A: Net Present value refers to the present value of future cash flow, which means cash flows generated…

Q: what is net present value in project management?

A: Net present value (NPV) is an important technique that is been used by the project manager in order…

Q: How do companies manage risk? What are the factors that contribute to a high-risk project?

A: In business there must be ups and downs in their business surroundings.  In every business there…

Q: What is the potentially acceptable investment alternative?

A: An alternative investment is a financial asset that doesn't can be categorized as one of the…

Q: Define operating leverage with examples and why it is potentially risky.?

A: Operating leverage is used to measure a company’s fixed costs as a percentage of its total costs. A…

Q: Do maturity models neglect ambiguities and uncertainties of projects or do they do just the…

A: The maturity model helps to evaluate the capability of an organisation. It also determines how…

Q: How had Chevron tried to mitigate the political risks of the project?

A: Political risk mitigation: These are methods to reduce the threats arising due to the political risk…

Q: How weak reserch culture have an affect on Low potential investment? Explain in detail.

A: The low potential investment is also known as the low-risk investment. It refers to the investment…

Q: How a successful engineering project affects a firm's market value?

A: Concept Market Value is value of a company in terms of its share value in the current market .It is…

Q: How can diversification reduce risks? Give examples from the rea world

A: Diversification is the process of managing risk which mixes the individual investments in a…

Q: How should firms evaluate projects with different risks?

A: Project evaluation is carried out by organization to know if a particular project is suitable for…

Q: Discuss the following statement: “A project may not be very riskyin spite of its high sensitivity to…

A: Sensitivity analysis is defined as the percentage change in one variable with respect to percentage…

Q: What are the methods of describing Project Risk?

A: The project risk is an unpredictable occurrence or situation that has an effect on at least one…

Q: How can we determine whether the project under consideration is of normal risk?

A: Introduction: Risk is nothing but the variation in real returns obtained as opposed to expected…

Q: What factors contribute to the risk of overusing financial leverage?

A: Financial leverage is the use of debt in the capital structure to acquire additional assets. Use of…

Q: What is the financial advantage (disadvantage) of further processing the intermediateproduct?

A: Further Processing means carrying the production of goods to another level and shifting its…

Q: It is possible to eliminate all risk by diversification? Explain your answer

A: Diversification is a technique used to reduce risk by investing in variety of assets. It is a risk…

Q: Why would a company like Chevron invest so much capital in a project with so many risks?

A: Unpredictable future and inherent risk embedded therein suffers major challenges during the exercise…

Q: How are the generation and evaluation of creative investment proposals far too important task?

A: Investment appraisal or evaluation is the two-fold task of balancing risk pertain to a definite…

Q: hich project should the company pursue? Why?

A: NPV = Present value of cashinflows - Present value of cash outlay.

Q: If a firm cannot measure a potential project’s risk with precision, should it abandonthe project?…

A: As per common dictionary, risk means chances of loss. There are two types of risk: Known Risks  and…

Q: If the initial cost of an investment project is not totally sunk (the project is not totally…

A: given information sunk cost is irreversible cost, the explanation starts from the step 2

Q: How important are assumptions in preparing a business project feasibility? Justify your answer. What…

A: A development plan, sometimes referred as a feasible analysis or sustainability report, is a method…

Q: Illustrate the main factors of Project Risk?

A: The project risk is defined as the uncertain event or condition that occurs mainly on positive or…

Q: Discuss how diversification can enhance risk reduction?

A: Introduction : Diversification can be understood as the act of distributing resources in such a…

Q: Why are the companies with low cash flow unable to bear the risk of a large project?

A: Cash flows are the inflow and outflow of cash and cash equivalents within an organization.A company…

Q: What is hedging and how is it different from diversification? If a firm needs to manage its risk,…

A: A hedge is an investment that is made fully intent on diminishing the danger of unfriendly value…

Q: Is it easier to measure the stand-alone, within-firm, or beta risk for projects such as anew…

A: Pure play technique can be used to compute project beta. In this technique, beta of companies having…

Q: How does risk management affect a company’s ability to finance its projects?

A: Risk is associated with every business; there are some risks which are controllable by the…

Q: Why is it costly to develop resources?

A: The cost of natural resources includes the cost of acquiring and preparing the resource extraction.…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.