Ch 9

Question 1

What analyses are used for prescriptive analytics?

Answer 1

marginal
cash flow
goal seek
scenario
sensitivity
optimization

Question 2

marginal analysis

Answer 2

an examination of the associated cost or benefit of very specific business decisions.

Question 3

what are the parts of a cash flow analysis

Answer 3

ARR, NPV, IRR

Question 4

cash flow analysis

Answer 4

evaluate returns to various investments and help decide if it makes sense to invest

Question 5

Accounting rate of return

Answer 5

the percentage rate of return expected on an asset. It compares profit to the initial investment cost.
If $1,000 investment gives us an average of $100 in profit each year, the ARR would be $100/$1,000 = 10%.

Question 6

Net Present Value

Answer 6

the present value of the cash inflows less the present value of the cash outflows

Question 7

Internal rate of return

Answer 7

the discount rate that makes the project’s net present value equal to zero, or the rate of return where the present value of cash outflows is exactly equal to the present value of the cash inflows

Question 8

goal seek analysis

Answer 8

a form of what-if analysis that tells us what input will be needed or what will need to be done (or assumed) in order to reach a desired outcome, output or result

Question 9

scenario analysis

Answer 9

the process of analyzing future events by considering potential outcomes.

Question 10

sensitivity analysis

Answer 10

evaluates the outcomes based on uncertainty regarding the inputs

Question 11

optimization

Answer 11

a technique used to find the best feasible solution based on
goal (objective function)
decision variables (what inputs can be varied)
business constraints

Question 12

what visualizations are used from prescriptive analytics

Answer 12

goal seek analysis
scenario analysis