Sensitivity Analysis

question 61

Multiple Choice

Sensitivity analysis:

• A)looks at the most reasonably optimistic and pessimistic results for a project.
• B)helps identify the variable within a project that presents the greatest forecasting risk.
• C)is used for projects that cannot be analyzed by scenario analysis because the cash flows are unconventional.
• D)is generally conducted prior to scenario analysis just to determine if the range of potential outcomes is acceptable.
• E)illustrates how an increase in operating cash flow caused by changing both the revenue and the costs simultaneously will change the net present value for a project.

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