18 Questions
What is the purpose of determining Return on Investment (ROI) for a project?
To measure the average rate of return on the invested money
Which statement best describes a high Return on Investment (ROI)?
The project's benefits greatly exceed its costs
Why is it cautioned in the text that Return on Investment (ROI) should not be the only measure of a project's wealth?
ROI can be misleading due to its limitations
What is another term used to refer to the Break-Even Point method?
Payback Method
How is the Break-Even Point method defined in relation to a project?
It is when all project costs have been repaid
Which financial concept involves dividing a project's net benefits by total costs to assess its worth?
Return on Investment
What does the payback method measure?
The number of years to recover original investments from net cash flows
What is an example of tangible benefits mentioned in the text?
Increased sales
How are intangible costs and benefits described in the text?
Difficult to incorporate into economic feasibility analysis
Which of the following is true about the break-even point?
It is easy to calculate and understand
Why is the break-even point considered biased against long-term projects?
It ignores cash flows after the break-even point is reached
What is the most effective strategy for estimating costs and benefits according to the text?
Rely on people with the best understanding of them
If predicting a specific value for a cost or benefit proves difficult, what strategy is suggested in the text?
Estimate a range of values and assign probability estimates
What does organizational feasibility refer to in a system implementation?
How well the system will be accepted by users and integrated into organization operations
Which of the following would not be considered a tangible benefit according to the text?
Intangible costs
Why is organizational feasibility often challenging to assess?
Because it can be difficult to gauge user acceptance and integration
What does Net Present Value (NPV) compare for a project?
The present value of all cash flows in today's dollar terms
What role does assigning specific dollar values to costs and benefits play in economic feasibility analysis?
Facilitates comparison and decision-making
Test your knowledge on the payback method and break-even point in project analysis. Understand how to calculate the number of years to recover investments and determine a project's liquidity. Explore the significance of these financial metrics in decision-making processes.
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