The Difference Between Scenario Analysis and Sensitivity Analysis Is

question 72

Multiple Choice

The difference between scenario analysis and sensitivity analysis is

• A) only sensitivity analysis allows us to change our estimated inputs of our net present value (NPV) analysis.
• B) scenario analysis considers the effect on net present value (NPV) of changing multiple project parameters.
• C) only scenario analysis breaks the net present value (NPV) calculation into its component assumptions.
• D) scenario analysis is based upon the internal rate of return (IRR) and sensitivity analysis is based upon net present value (NPV).

Describe the difference between temporary and permanent working capital.

Identify and explain the components of net working capital.

Recognize the implications of working capital management decisions on a firm’s liquidity.

Analyze the role of seasonal fluctuations on working capital needs.

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Definitions:

Strategy Frame

The perspective or approach adopted for planning and decision-making to achieve desired outcomes.

Issue Frame

The way in which a topic or problem is presented or perceived, often highlighting certain aspects over others to shape public opinion or policy.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to mind when evaluating a specific topic, concept, method, or decision.

Political Priming

The process by which exposure to a stimulus influences the response to a subsequent stimulus, by activating a political concept or schema.