Which of the Following Is Not a Step in the Process

question 69

Multiple Choice

Which of the following is not a step in the process for addressing capital budgeting decisions?

• A) Identify decision alternatives
• B) Identify financial statement effects
• C) Apply quantitative analysis techniques
• D) Perform sensitivity analysis

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Definitions:

Sensitivity Analysis

is a technique used to determine how different values of an independent variable will affect a particular dependent variable under a given set of assumptions.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of investments.

Variable Costs

Variable Costs are expenses that vary directly with the level of output or production, such as materials and labor costs.

NPV Calculations

A method used to evaluate the profitability of an investment by calculating the difference between the present values of cash inflows and outflows over a period of time.