Sensitivity Analysis

question 61

Multiple Choice

Sensitivity analysis:

• A)looks at the most reasonably optimistic and pessimistic results for a project.
• B)helps identify the variable within a project that presents the greatest forecasting risk.
• C)is used for projects that cannot be analyzed by scenario analysis because the cash flows are unconventional.
• D)is generally conducted prior to scenario analysis just to determine if the range of potential outcomes is acceptable.
• E)illustrates how an increase in operating cash flow caused by changing both the revenue and the costs simultaneously will change the net present value for a project.

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Definitions:

VALS Framework

A psychographic segmentation tool that classifies consumers based on their values, attitudes, and lifestyles.

Psychological Resources

Mental and emotional assets that help individuals cope with life's challenges, such as resilience, self-esteem, and optimism.

Material Resources

Physical or tangible assets that are used in the production or supply of goods and services.

Survivors

Individuals or entities that remain active or viable after a particularly challenging period or event, often having adapted to new conditions.