Sensitivity Analysis on a Potential Project

question 68

Multiple Choice

Sensitivity analysis on a potential project

• A)is only useful to perform when there are firm calculations on the project available.
• B)is useful to perform when uncertainty exists and calculations are based on estimates.
• C)is designed to ensure that management is aware of all possible outcomes of the project.
• D)is designed to provide an escape-hatch for management should the project not succeed.

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Definitions:

GDP

Totaling the market value of all final goods and services produced inside a country within a set period results in the Gross Domestic Product.

Inflations

The speed at which the overall price level of goods and services increases, leading to a decrease in buying power.

Taxes

Compulsory financial charges imposed by a government on individuals or entities to fund public expenditures.

Automatic Stabilizer

Economic strategies and initiatives aimed at balancing shifts in a country's economic performance without interference from governmental or policy-making bodies.