Management and Organizational Studies 3311A/B Final: MOS-3311-Final-Notes

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3311A/B
• Professor: Lucas Thung

Document Summary

Note: equations in red are not given on aid sheet, equations in orange given. 9 risk analysis, real options, and capital budgeting. Decision trees identify the sequential decisions in npv project & analysis. Graphically represent alternatives available and the likely consequences. Calculate npv of successful & unsuccessful outcomes (npv @ t = 1) Expected payoff = (prob success x payoff success) + (prob fail x payoff fail) Note: projected cash flows may be unmet realistically. Ratios to look behind npv and analyze effect of various assumptions used. Every __% drop in revenues leads to a __% drop in npv. Npv = 0 = -investment + iatcf/(1+r)t: accounting b/e = sales volume where ni = 0, cash b/e = sales volume where ocf = 0, financial b/e = sales volume where npv = 0. Calculate npvs for good, normal, and bad scenarios. Models real-world uncertainty, used to analyze gambling strategies. Interactions between variables explicitly specified (more complete analysis)