The Purpose of Sensitivity Analysis Is to Show

question 3

Multiple Choice

The purpose of sensitivity analysis is to show:

• A) the optimal level of the capital budget.
• B) how price changes affect break-even volume.
• C) seasonal variation in product demand.
• D) how variables in a project affect profitability.

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Definitions:

Probability

The extent to which an event is likely to occur, measured by the ratio of the favorable cases to the whole number of cases possible.

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 and 1.

Probability

A measure or estimation of how likely it is that an event will occur, expressed as a number between 0 and 1.

Unfavorable

Describing something that is disadvantageous, negative, or not beneficial; often related to opinions, conditions, or outcomes.