When using simulation to analyze a large capital project, the decision rule is
A) There is no clear cut decision rule, but the probabilities will produce a more informed decision.
B) Accept the project if the probability of a positive NPV is greater than 50%.
C) Reject the project if the probability of a negative NPV is greater than 5%
D) Reject the project if the probability of a negative NPV is greater than 16%

Question

Quizplus · Accepted Answer

Simulation provides a range of outcomes and probabilities rather than a single "yes/no" decision. Therefore, the decision rule should be based on a comprehensive analysis of the probabilities and their associated risks, rather than a simple cutoff point.

When Using Simulation to Analyze a Large Capital Project, the Decision