A drawback in the use of sensitivity analysis in capital budgeting decisions is that it doesn't
A)permit evaluating alternative outcomes.
B)provide estimates of net present values.
C)assign probability values to outcomes.
D)consider different possible rates of discount.

Question

Quizplus · Accepted Answer

Sensitivity analysis focuses on measuring how changes in variables impact the outcome of a decision. While it provides insights on the key drivers of a project's success, it doesn't assign probabilities to potential outcomes or generate alternative scenarios. Therefore, option C is the correct answer to the question.

A Drawback in the Use of Sensitivity Analysis in Capital