In Completing a Sensitivity Analysis for a Capital Budgeting Project

question 23

Multiple Choice

In completing a sensitivity analysis for a capital budgeting project, which of the following would typically be varied?
I. Discount rate
II. Future cash flows
III. Future accrual-basis revenues and expenses

• A) I and III only
• B) II and III only
• C) I and II only
• D) I, II, and III

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Definitions:

Federal Reserve

The central banking system of the United States, responsible for conducting national monetary policy and overseeing financial institutions.

Excess Reserves

The difference between actual reserves and required reserves.

Commercial Banks

Financial institutions that accept deposits, offer checking account services, and make various loans to businesses and individuals.

Open Market Operations

Central bank activities that buy and sell government securities in the open market to influence liquidity and interest rates.