Which of the following statements is correct?
A) Sensitivity analysis is incomplete because it fails to consider the range of likely values of key variables as reflected in their probability distributions.
B) In comparing two projects using sensitivity analysis, the one with the steeper lines would be considered less risky, because a small error in estimating a variable, such as unit sales, would produce only a small error in the project's net present value (NPV).
C) The primary advantage of simulation is that it provides a very accurate point estimate of a project's NPV.
D) One important benefit of simulation analysis as compared to scenario analysis is that once the analysis is complete, it provides a clear accept/reject decision rule.
E) Simulation considers only discrete outcomes for a project.

Question

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The Answer of Which of the following statements is correct?
A) Sensitivity analysis is incomplete because it fails to consider the range of likely values of key variables as reflected in their probability distributions.
B) In comparing two projects using sensitivity analysis, the one with the steeper lines would be considered less risky, because a small error in estimating a variable, such as unit sales, would produce only a small error in the project's net present value (NPV).
C) The primary advantage of simulation is that it provides a very accurate point estimate of a project's NPV.
D) One important benefit of simulation analysis as compared to scenario analysis is that once the analysis is complete, it provides a clear accept/reject decision rule.
E) Simulation considers only discrete outcomes for a project.

Which of the Following Statements Is Correct