An Investigation of the Degree to Which NPV Depends on Assumptions

question 55

Multiple Choice

An investigation of the degree to which NPV depends on assumptions made about any singular critical variable is called a(n) :

• A)operating analysis.
• B)sensitivity analysis.
• C)marginal benefit analysis.
• D)decision tree analysis.
• E)None of the above.

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Definitions:

Productivity

Refers to the efficiency of production in terms of units produced per unit of input, such as labor or capital.

Resource

A resource is any physical or virtual entity of limited availability that needs to be consumed to obtain a benefit.

Productivity

The effectiveness in producing outcomes or results; can refer to the rate at which work is completed or the efficiency of resource use.

Output

The total amount of goods or services produced by a firm, industry, or economy within a specific period.