HSMA 4055 QUIZ 6 REVIEW QUESTIONS AND ANSWERS
Which of the following statements about project cash flow estimation is incorrect? - CORRECT
ANSWER✅✅sunk costs should be included
Which of the following statements about financial risk incorrect? - CORRECT ANSWER✅✅The higher
the risk, the lower the project cost of capital (discount rate)
Which of the following is not a relevant cash flow when estimating the incremental cash flows for a new
hospital service? - CORRECT ANSWER✅✅the cost of consultant's report concerning the feasibility of the
service that was completed (and paid for) in the previous year
A medical group practice is considering offering a new service with risk that is greater than the current
risk of the business. In evaluating this investment, the decision maker should - CORRECT
ANSWER✅✅increase the cost of capital applied to the project to make it higher than the business's
corporate cost of capital
Which of the following statements about project cash flow estimation is most correct? - CORRECT
ANSWER✅✅depreciation expense can be ignored when estimating project cash flows within not-for-
profit organizations
Which of the following statements about project risk analysis techniques is most correct? - CORRECT
ANSWER✅✅scenario analysis considers the joint (combined) impact of changes in uncertain input
variables on profitability
Which of the following statements about the qualitative approach to project risk assessment is most
correct? - CORRECT ANSWER✅✅qualitative risk assessment involves the answers to a number of
yes/no questions
typically, yes answers are assigned one point and no answers zero points
the higher score, the greater risk
Which of the following statements about project cash flow estimation is incorrect? - CORRECT
ANSWER✅✅sunk costs should be included
Which of the following statements about financial risk incorrect? - CORRECT ANSWER✅✅The higher
the risk, the lower the project cost of capital (discount rate)
Which of the following is not a relevant cash flow when estimating the incremental cash flows for a new
hospital service? - CORRECT ANSWER✅✅the cost of consultant's report concerning the feasibility of the
service that was completed (and paid for) in the previous year
A medical group practice is considering offering a new service with risk that is greater than the current
risk of the business. In evaluating this investment, the decision maker should - CORRECT
ANSWER✅✅increase the cost of capital applied to the project to make it higher than the business's
corporate cost of capital
Which of the following statements about project cash flow estimation is most correct? - CORRECT
ANSWER✅✅depreciation expense can be ignored when estimating project cash flows within not-for-
profit organizations
Which of the following statements about project risk analysis techniques is most correct? - CORRECT
ANSWER✅✅scenario analysis considers the joint (combined) impact of changes in uncertain input
variables on profitability
Which of the following statements about the qualitative approach to project risk assessment is most
correct? - CORRECT ANSWER✅✅qualitative risk assessment involves the answers to a number of
yes/no questions
typically, yes answers are assigned one point and no answers zero points
the higher score, the greater risk
