Which of the Following Should a Management Team Carry Out

question 10

Multiple Choice

Which of the following should a management team carry out to get a complete picture of a project?

• A) Sensitivity analysis and break- even NPV calculations
• B) Sensitivity analysis, break- even NPV calculations and scenario analysis
• C) Sensitivity analysis and scenario analysis
• D) Break- even NPV calculations and scenario analysis

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Definitions:

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Variable Cost

A cost that depends on the level of production chosen.

Marginal Revenue

The incremental gain in revenue achieved by a company for selling an additional unit of product or service.

Marginal Cost

The additional cost incurred by producing one more unit of a good or service, a critical concept for economic analysis and decision-making.