Project Management: Payback Model and Financial Strategy
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Questions and Answers

What is the main limitation of the Payback model?

  • Ignores the time value of money (correct)
  • Considers profitability
  • Ignores cash flows
  • Emphasizes cash flows
  • What does a positive Net Present Value (NPV) indicate?

  • The project meets the minimum desired rate of return and is eligible for further consideration (correct)
  • The project will recover the project investment quickly
  • The project ignores the time value of money
  • The project is rejected
  • What does the Net Present Value (NPV) model use to compute the present value of all net cash inflows?

  • Discount rate (correct)
  • Payback period
  • Return on investment
  • Profit margin
  • Which model uses a list of questions to review potential projects and determine their acceptance or rejection?

    <p>Checklist Model</p> Signup and view all the answers

    What is the main drawback of the Checklist Model?

    <p>It fails to answer the relative importance or value of a potential project.</p> Signup and view all the answers

    Which nonfinancial strategic criterion aims to prevent government intervention and regulation?

    <p>To prevent government intervention and regulation</p> Signup and view all the answers

    What does the organization need to do when reassessing its goals and priorities?

    <p>Evaluate the progress of current projects</p> Signup and view all the answers

    Which type of projects involve technological breakthroughs with high commercial payoffs?

    <p>Oysters</p> Signup and view all the answers

    What is used to balance the portfolio for risks and types of projects?

    <p>Priority system</p> Signup and view all the answers

    Which term refers to projects that showed promise at one time but are no longer viable?

    <p>White Elephants</p> Signup and view all the answers

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