Financial Management: Principles and Applications, 13/e

Chapter 13 Risk Analysis and Project Evaluation

Chapter Outline

1. 13.1 The Importance of Risk Analysis (pg. 410)

   1. Objective 1. Explain the importance of risk analysis in the capital-budgeting decision-making process.

2. 13.2 Tools for Analyzing the Risk of Project Cash Flows (pgs. 411–421)

   1. Objective 2. Use sensitivity, scenario, and simulation analyses to investigate the determinants of project cash flows.

3. 13.3 Break-Even Analysis (pgs. 422–432)

   1. Objective 3. Use break-even analysis to evaluate project risk.

4. 13.4 Real Options in Capital Budgeting (pgs. 432–434)

   1. Objective 4. Describe the types of real options.

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