Using a Computer Model to Repeatedly Vary the Combination of Project

question 56

Multiple Choice

Using a computer model to repeatedly vary the combination of project variables in order to compare NPVs is called:

• A) Scenario analysis
• B) Sensitivity analysis
• C) NPV break-even analysis
• D) Simulation analysis

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Definitions:

Prices of Raw Materials

The cost of basic materials used in the manufacture of products, which can affect production costs and pricing strategies.

Fiscal Policy

Government spending and taxation decisions designed to control inflation, reduce unemployment, improve the general welfare of citizens, and encourage economic growth.

Increased Taxes

A financial situation where a government raises the rates of taxes, affecting individuals or businesses.

Reduced Government Spending

A situation where the government decreases its expenditure in various sectors to manage its budget, often affecting public services and investments.