How is sensitivity analysis used in project selection?
Contrast risk with uncertainty. Describe the window-of-opportunity approach.
How does a risk analysis operate? How does a manager interpret the results?
Can risk analysis be used for non-project business decision making? Explain how.
Contrast validity with reliability. What aspects, if any, are the same?
Contrast subjective and objective measures. Give examples of the proper use of each type of measure when evaluating competing projects.
Can a measure be reliable, yet invalid? Explain.
Interpret the columns of data in Table 2-4. Does the $10,968 value mean that the project is expected to return only this amount of discounted money?
How would you find the probability in Figure 2-9 of an NPV of over $20,000?
Reconsider Table 2-3 to explain why the simulated outcome in Table 2-4 is only about half as much as the value originally obtained in Table 2-2.
Does the spread of the data in Table 2-3 appear realistic?
What important comparisons does the aggregate project plan in Figure 2-10 allow?