One of the Problems Inherent in Sensitivity Analysis Is That

question 83

Multiple Choice

One of the problems inherent in sensitivity analysis is that:

• A) NPVs do not change once a project is introduced.
• B) most projects are equally sensitive to all variables.
• C) it can be difficult to define the range of outcomes.
• D) the cost of conducting the analysis is excessive.

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Definitions:

Interest Rate

The amount charged, expressed as a percentage of the principal, by a lender to a borrower for the use of assets.

Crowding Out

An economic situation where private investment decreases due to an increase in government borrowing and spending.

Household Spending

This refers to the total amount of money spent by households in an economy on goods and services over a particular period of time.

Net Exports

The value of a country's total exports minus its total imports, a crucial component of the gross domestic product.