Theoretically,the NPV is the most appropriate method to determine the acceptability of a project.A false sense of security can overcome the decision-maker when the procedure is applied properly but the positive NPV results are accepted blindly.Sensitivity and scenario analysis aid in the process by:
A) providing assurance that the most appropriate discount rate is being applied.
B) ensuring all estimated values are accurate.
C) ensuring the NPV value was calculated correctly.
D) providing information on a number of potential outcomes.
E) guaranteeing the NPV will be achieved.
Correct Answer:
Verified
Q1: As the degree of sensitivity of a
Q2: Fixed costs:
A)change as the quantity of output
Q4: Which one of the following statements is
Q5: The accounting profit break-even point is unaffected
Q6: An analysis of what happens to the
Q7: All else equal,the contribution margin must increase
Q8: Conducting scenario analysis helps managers see the:
A)impact
Q9: Sensitivity analysis:
A)is more difficult to conduct than
Q10: An analysis of the relationship between the
Q11: Sensitivity analysis is conducted by:
A)holding all variables
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