Sensitivity Analysis Evaluates Projects By

question 73

Multiple Choice

Sensitivity analysis evaluates projects by:

• A) forecasting changes in interest rates that would increase financing costs.
• B) recording profitability changes while changing one variable at a time.
• C) ensuring that the project sponsor has the proper incentives.
• D) testing for interrelated variables.

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Definitions:

Vertically Integrated

A company structure where the company controls multiple stages of production, distribution, or both within the same industry.

Entire Value Chain

The full range of activities involved in designing, producing, marketing, and selling a product or service, from initial concept to delivery to the end user.

Variable Selling

Costs associated with selling that vary directly with the level of sales activity.

Administrative Costs

Administrative costs are expenses related to the general operations of a business, including salaries of office staff, utilities, and rent.