A Financial Manager Reviewing a Project Is Concerned About the Level

question 154

Multiple Choice

A financial manager reviewing a project is concerned about the level of forecasting risk in the project's estimated cash flows. The manager should use ___________ to identify the variable that presents the highest degree of forecasting risk.

• A) Scenario analysis.
• B) Simulation analysis.
• C) Sensitivity analysis.
• D) Break-even analysis.
• E) Strategic options analysis.

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Definitions:

AGI

Adjusted Gross Income, which is total income adjusted by certain allowable deductions, serving as the base for calculating taxable income.

Qualifying Expenses

Expenses that are determined to be necessary and deductible under tax law for various benefits like education savings accounts or business expenses.

Child and Dependent

Terms used in tax law to refer to individuals for whom the taxpayer provides more than half of financial support, qualifying the taxpayer for certain deductions.

Care Expense Credit

A tax credit available for expenses incurred in caring for a qualifying individual to allow the taxpayer to work or look for work.