Ch 4: Project Evaluation & Analysis

About This Chapter

This chapter on project evaluation and analysis is an exploration of how companies determine the likely costs of a potential undertaking and weigh the likelihood of profiting from the venture.

Project Evaluation & Analysis -- Chapter Summary and Learning Objectives

Before risking resources on a major new project, such as a factory or new product line, companies must determine how much they can spend and still remain profitable when the project is complete. These engaging video lessons will show you the techniques used to determine risk, project likely cash flows, and capital rationing on any new project. Topics covered in the chapter include:

  • Determination of current resources
  • Examination of possible project outcomes
  • Determination of when the project is likely to break-even
  • Exploration of the health of a company's operating income
  • Explanation of caps put on capital expenditures to limit risk to the company

Video Objective
Net Present Value: Evaluating Estimates Learn about evaluating NPV estimates, forecasting risk, and the sources of value.
What-If Analyses: Scenario, Sensitivity & Simulation Discuss the three types of what-if analyses.
Break-Even Analysis: Definition & Example Take a look at the difference between fixed and variable costs as well as break-even analysis.
Accounting Break-Even & Operating Cash Flow Address operating cash flow, sales volume, and the break-even point in accounting.
Operating Leverage: Definition, Calculation & Examples Explore the measurement, implications, and break-even of operating leverage.
Capital Rationing: Definition, Types & Example Review hard and soft capital rationing.

6 Lessons in Chapter 4: Project Evaluation & Analysis
Test your knowledge with a 30-question chapter practice test
Net Present Value: Evaluating Estimates

1. Net Present Value: Evaluating Estimates

In this lesson we'll take a look at why businesses use net present value, what they need to know to calculate it, and how it can help them make business decisions.

What-If Analyses: Scenario, Sensitivity & Simulation

2. What-If Analyses: Scenario, Sensitivity & Simulation

Even the best manager or analyst can't predict the future. But, different types of 'what if' analyses can help managers anticipate potential future scenarios. In this lesson, we'll discuss some of these 'what if' analysis tools.

Break-Even Analysis: Definition & Example

3. Break-Even Analysis: Definition & Example

Performing a break-even analysis can help you make decisions regarding how much of your product or service you need to sell to make a profit. In this lesson, you'll learn what a break-even analysis is and how it is calculated.

Accounting Break-Even & Operating Cash Flow

4. Accounting Break-Even & Operating Cash Flow

In business, it's important to know how much product to sell in order to cover your expenses. This is what we refer to as the break-even point. Let's take a look at how to calculate the break-even point and how it relates to operating cash flow.

Operating Leverage: Definition, Calculation & Examples

5. Operating Leverage: Definition, Calculation & Examples

Explore the definition and importance of operating leverage, and take a look at examples to assist you in the accounting process. When you are finished with the lesson, there is a quiz to test your knowledge.

Capital Rationing: Definition, Types & Example

6. Capital Rationing: Definition, Types & Example

In this lesson, you will learn about two types of capital rationing and how to rank projects when your company is subject to rationing. We'll discuss the importance of knowing the profitability index and how to apply it in these situations.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
Not Taken
Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

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