Which of the following statements is NOT accurate regarding scenario analysis?
A) A positive NPV for a project's worst case scenario means it is likely the project will in fact offer a positive return.
B) The worst case scenario is used to identify the point at which a project's NPV becomes negative.
C) The base case scenario generally represents an average estimate of NPV.
D) If the NPV of the best case scenario is negative then it is likely unnecessary to create base and worst case scenarios.
E) Scenario analysis is likely not as effective as sensitivity analysis for determining which variables have the greatest impact on projected NPVs.
Correct Answer:
Verified
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