United recycling inc. is one of the largest recyclers of glass and paper products in the united states. the company is looking into expanding into the cardboard recycling business. the company’s cfo has performed a detailed analysis of the proposed expansion.
the company’s cfo used sophisticated software to analyze a large number of scenarios and generate estimated rates of return and risk indexes.
1. based on the information given, determine which of the statement sis correct: a. the company's cfo conducted a sensitivity analysis to evaluate the project's financial model. b. the compnay's cfo used a monte carlo simulation to evaluate the project's financial model2. evaluating risk is an important part of the capital budgeting process. which of the following is measured by its effect on the firm's beta coefficient? a. market, or beta, riskb. risk-adjusted cost of capitalc. corporate, or within-fim, riskd. stand-alone risk
3. the problem with using (a. market risk, b. corporate, or within-firm risk, c. a risk-adjusted cost of capital, d. stand-alone risk) when trying to adjust for projects that are more risky or less risky than a firm's average project is that these adjustments are extremely subjective and difficult to justify.