An Exploration of the Effect on NPV of Changing Multiple

question 92

Multiple Choice

An exploration of the effect on NPV of changing multiple project parameters is called:

• A)scenario analysis.
• B)IRR analysis.
• C)accounting break-even analysis.
• D)sensitivity analysis.

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Definitions:

Standard Materials Quantity

The expected amount of materials that should be used for the production of a certain number of units, as set by a company's standards.

Board Feet

A unit of measure for the volume of lumber, equivalent to a piece of wood one foot long, one foot wide, and one inch thick.

Direct Materials Quantity Variance

The difference between the expected and actual quantity of materials used in production, multiplied by the standard cost per unit of material.

Actual Costs

The real costs incurred in the production of goods or services, including all expenses such as materials, labor, and overhead.