Sensitivity Analysis

question 73

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

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Definitions:

Spatial Ability

The skill to grasp, think through, and remember how objects or spaces relate to each other spatially.

Building Blocks

Fundamental components or elements that make up a larger system, concept, or structure.

Between-Subjects Design

A research paradigm in which different experimental participants participate in different experimental conditions.

Empiricist

A philosophical approach that emphasizes knowledge derived from sensory experience as the basis of understanding.