If a 20 Percent Reduction in Forecast Sales Would Not

question 46

Multiple Choice

If a 20 percent reduction in forecast sales would not extinguish a project's profitability, then sensitivity analysis would suggest:

• A)de-emphasizing that variable as a critical factor.
• B)requiring a more detailed sales forecast.
• C)the initial sales forecasts were inflated.
• D)a reallocation of fixed costs to this product.

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Definitions:

Annual Rate

The interest rate for a loan or investment expressed over a one-year period.

Annual Rate

The interest rate for a period of one year, often used as a standard measure for comparing the returns on investments.

Payment Today

A term typically used in finance that refers to an immediate transaction or payment that has to be made or is made at the current date.

Equal Payments

Regularly scheduled payments of the same amount over the term of a loan or mortgage.