Sensitivity Analysis Determines The

question 105

Multiple Choice

Sensitivity analysis determines the:

• A)range of possible outcomes given that most variables are reliable only within a stated range.
• B)degree to which the net present value reacts to changes in a single variable.
• C)net present value range that can be realized from a proposed project.
• D)degree to which a project relies on its fixed costs.
• E)ideal ratio of variable costs to fixed costs for profit maximization.

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Definitions:

Vertical Integration

A company's expansion into different stages of production or distribution within the same industry, controlling more of its supply chain.

Upstream Price Discrimination

Differential pricing strategy employed before the product reaches the final consumer, often involving wholesalers or distributors.

Arbitrage

The simultaneous purchase and sale of the same assets in different markets to profit from unequal prices.

Vertical Contracts

Agreements between firms at different levels in the supply chain, such as between a manufacturer and a retailer, to control the terms of sale or distribution.