If a 20% reduction in a project's forecast sales would still result in a positive NPV,then sensitivity analysis would suggest:
A) that there is little point in further market research.
B) that a more detailed sales forecast is required.
C) that the initial sales forecasts were inflated.
D) that more of the company's overhead costs can be allocated to this product.

Question

Quizplus · Accepted Answer

A 20% reduction still resulting in a positive NPV indicates that the project is not highly sensitive to sales forecasts, suggesting further market research may not be necessary.

If a 20% Reduction in a Project's Forecast Sales Would