What are options models and when should they be used to evaluate projects? Provide an example
What will be an ideal response?
Options models open financial analysis to consider a greater range of alternatives to immediate investment. Organizations can factor the benefit of postponing decisions (and projects) until financial models indicate projects are worth pursuing. Examples may vary, but suppose firm A can wait until more market research is performed or until a supplier solves quality and logistics issues. The cash flows may be superior to those that would come from immediate investment if company A had to suffer through those issues with their supplier. Because company A can wait a year, the project scores better on the NPV calculations, clearing the company's predetermined financial hurdle and will just have to wait to begin rather than being counted as too great a financial risk.
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Pretrial conferences are:
A) Formal proceedings before the court. B) Permitted by federal and most state rules. C) To nail down all of the last minute items before going into trial. D) None of the above.
According to the AICPA, the auditor needs to form an opinion on the financial statements based on an evaluation of the audit evidence obtained. This is stated in which AICPA principle governing an audit conducted in accordance with GAAS?
a. Principle 1 b. Principle 4 c. Principle 5 d. Principle 7