EEM-WkShop-Guide 05
  • 1. What Is a Cost-Benefit Analysis?
A) A cost-benefit analysis is a systematic process that businesses use to analyze which decisions to make and which to for go
B) Some consultants or analysts also build models to assign a dollar
C) The cost-benefit analyst sums the potential rewards expected from a situation or action
  • 2. Before building a new plant or taking on a new project what a manager should do?
A) Some consultants or analysts also build models to assign a dollar.
B) Prudent managers conduct a cost-benefit analysis to evaluate all the potential costs and revenues that a company might generate from the project.
C) The outcome of the analysis will determine whether the project is financially feasible or if the company should pursue another project.
  • 3. In many models, a cost-benefit analysis will also factor the opportunity cost into ________________.
A) The decision-making process.
B) Opportunity costs are alternative benefits that could have been realized when choosing one alternative over another.
C) The outcome of the analysis will determine whether the project is financially feasible or if the company should pursue another project.
  • 4. The results of the aggregate costs and benefits should be compared quantitatively to determine if the benefits outweigh the costs.
A) Opportunity costs are alternative benefits that could have been realized when choosing one alternative over another.
B) If so, then the rational decision is to go forward with the project.
C) Is a systematic process that businesses use to analyze which decisions to make and which to forgo.
  • 5. There are a number of forecasts built into the process, and if any of the forecasts are inaccurate, What is the result?
A) Cost-benefitfit analysis.
B) The results may be called into question.
C) There is no single universally accepted method of performing a cost-benefit analysis.
  • 6. To understand your situation, identify your goals, and create a framework to mold your scope. It is?
A) To decide whether to renovate a company's website"
B) An example of a cost-benefit analysis purpose could be "to determine whether to expand to increase market share
C) The first step of a cost-benefit analysis
  • 7. What is including in the initial stage where the project planning takes place
A) Including at the point that a company should assess whether it is equipped to perform the analysis
B) A company may realize it does not have the technical staff required to perform an adequate
C) Including the timeline, resources needed, constraints, personnel required, or evaluation techniques
  • 8. The second step of a cost-benefit analysis is?
A) Whether the expenses are reoccurring or a one-time cost.
B) To determine the project costs.
C) Opportunity costs such as alternative investments
  • 9. Costs may include the following.
A) Performing sensitivity analysis to understand how slight changes in estimates may impact outcomes.
B) Indirect costs might include electricity, overhead costs from management, rent, utilities.
C) Opportunity costs such as alternative investments, Or buying a plant versus building one.
  • 10. It's also important to evaluate whether costs are variable or fixed
A) Indirect costs might include electricity, overhead costs from management, rent, utilities.
B) If they are fixed, consider what step costs and relevant range will impact those costs.
C) Opportunity costs such as alternative investments, Or buying a plant versus building one.
  • 11. Every project will have different underlying principles benefits might include the following:
A) Taking special care not to underestimate costs or overestimate benefits.
B) Higher An analyst or project manager should apply a monetary measurement to all of the items on the cost-benefit listrevenue and sales from increased production or new product.
C) An analyst or project manager should apply a monetary measuremenot to all of the items on the cost-benefit list.
  • 12. Depending on the timeframe of the project, this may be as simple as subtracting one from another; if the benefits are higher than the cost
A) Utilizing various discount rates depending on various situations
B) The project has a net benefit to the company
C) Calculating cost-benefit analysis for multiple options
  • 13. Some cost-benefit analysis requires more in-depth critiquing. This may include:
A) Level-setting different options by calculating the cost-benefit ratio.
B) Applying discount rates to determine the net present value of cashflows.
C) Calculating cost-benefit analysis for multiple options.
  • 14. The analyst that performs the cost-benefit analysis must often then synthesize findings to present to management. This includes concisely.
A) Applying discount rates to determine the net present value of cashflows
B) Level-setting different options by calculating the cost-benefit ratio
C) Summarizes the costs, benefits, net impact, and how the finding ultimately support the original purpose of the analysis
  • 15. Every project will have different underlying principles; benefits might include the following:
A) A conservative approach with a conscious effort to avoid any subjective tendencies
B) Higher revenue and sales from increased production or new product
C) Analysts should also be aware of the challenges in determining both explicit and implicit benefits
  • 16. Which are the benefits that require future assumptions about market conditions, sales quantities, customer demands, and product expectations
A) Explicit benefits
B) About increasing employee satisfaction
C) Implicit costs
  • 17. Which are the other assumptions on the other hand, may be difficult to calculate as there may be no simple formula.
A) There is no formula to calculate the financial impact of happier workers.
B) Implicit costs
C) Explicit benefits
  • 18. For very large projects with a long-term time horizon, a cost-benefit analysis might fail to account for important financial concerns such
A) Alternative rate of return that could be earned if the project had never been done.
B) As inflation, interest rates, varying cash flows, and the present value of money.
C) A conservative approach with a conscious effort to avoid any subjective tendencies.
  • 19. The forecasts used in any cost-benefit analysis might include:
A) The project needs to earn at least more than the rate of return that could be earned elsewhere or the discount rate
B) There are a significant amount of forecasts built into the models
C) Future revenue or sales, alternative rates of return, expected costs, and expected future cash flows
  • 20. What Is the Main Goal of Using a Cost-Benefit Analysis?
A) Management leverages the findings of a cost-benefit.
B) There are more benefits to a project or if it is more detrimental to a company.
C) The main goal of cost-benefit analysis is to determine whether it is worth undertaking a project or task.
  • 21. What Are Some Tools or Methods Used in Cost-Benefit Analysis?
A) Depending on the specific investment or project being evaluated, one may need to discount the time value of cash flows using net present value calculations
B) A conservative approach with a conscious effort to avoid any subjective tendencies
C) Management leverages the findings of a cost-benefit
  • 22. What Are the Costs and Benefits of Doing a Cost-Benefit Analysis?
A) The project needs to earn at least more than the rate of return that could be earned elsewhere or the discount rate
B) A conservative approach with a conscious effort to avoid any subjective tendencies
C) If the cost-benefit analysis of doing a cost-benefit analysis is positive, you should do it!
  • 23. What Is an Externality?
A) The externality Individual or an organization
B) An externality is a cost or benefit caused by a producer that is not financially incurred or received by that producer
C) The costs and benefits can be both private
  • 24. Externalities by nature are generally environmental
A) The costs and benefits can be both private
B) Such as The costs and benefits can be both privatenatural resources or public health
C) Implicit costs
  • 25. It is a business that causes pollution that diminishes the property values or health of people in the surrounding area
A) The costs and benefits can be both Almost all externalities are considered to be technical externalitiesprivate
B) A negative externality
C) A conservative approach with a conscious effort to avoid any subjective tendencies
  • 26. ________________includes actions that reduce transmission of disease or avoids the use of lawn treatments that runoff to rivers and thus contribute to excess plant growth in lakes
A) Subjective tendencies
B) The costs and benefits can be both private
C) A positive externality
  • 27. Externalities occur in an economy when the production or consumption of a specific good or service impacts
A) Apositive Externality
B) Almost all externalities are considered to be technical externalities
C) A third party that is not directly related to the production or consumption of that good or service.
  • 28. Technical externalities have an impact on the consumption and production opportunities of unrelated third parties
A) The costs and benefits can be both private
B) But the price of consumption does not include the externalities.
C) Deficiencies
  • 29. Many economists consider technical externalities to be market
A) People advocate for government intervention
B) Externalities through taxation and regulation
C) Deficiencies
  • 30. Fill out the blank space-_______- is a well-known negative externality. A corporation may decide to cut costs and increase profits by implementing new operations that are more harmful to the environment
A) Pollution
B) Research and development
C) Companies benefits
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