What Is the Effect of Conducting a Sensitivity Analysis in Capital

question 7

Multiple Choice

What is the effect of conducting a sensitivity analysis in capital budgeting?

• A)It helps analysts to determine if results are particularly affected by specific estimates.
• B)It complicates the process of making a decision when there are conflicting signals.
• C)Preferences for one capital investment alternative over another will change.
• D)all of the above

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Definitions:

Net Income

The amount of profit left over after all expenses and taxes have been subtracted from total revenue.

Depreciation Expense

The allocated portion of the total cost of a company's tangible assets that is charged to expense across the asset's useful life.

Net Income

Net income is the total earnings of a company after all expenses and taxes have been subtracted from total revenue.