Which One of the Following Statements Concerning Sensitivity Analysis Is

question 58

Multiple Choice

Which one of the following statements concerning sensitivity analysis is correct?

• A) A project that has positive internal rates of return under the base, best, and worst case scenarios is a project that will produce a positive net present value under all three of those
• Conditions.
• B) When measuring the sensitivity of the sales price, the estimated variable cost per unit used in the analysis should be changed in direct proportion to the change in the estimated
• Level of sales.
• C) The most common approach to sensitivity analysis is to simultaneously vary sales in an upward direction as the estimated costs are varied in a downward direction to estimate
• The most optimistic outcome that can be reasonably expected.
• D) Sensitivity analysis on the sales quantity generally indicates that the net present value of a project is inversely related to the quantity of units produced and sold.
• E) The amount of forecast risk in any one variable can be ascertained using sensitivity analysis.

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