Which of the Following Statements Is False

question 6

Multiple Choice

Which of the following statements is false?

• A) We can use scenario analysis to evaluate alternative pricing strategies for our project.
• B) Scenario analysis considers the effect on NPV of changing multiple project parameters.
• C) The difference between the IRR of a project and the cost of capital tells you how much error in the cost of capital it would take to change the investment decision.
• D) Scenario analysis breaks the NPV calculation into its component assumptions and show how the NPV varies as each one of the underlying assumptions change.

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Definitions:

Cash Flow Statement

A report detailing the impact of variations in balance sheet figures and income on cash and cash equivalents, segmented into operations, investments, and finance-related actions.

Dividend Payments

Dividend payments are the distribution of a portion of a company's earnings, decided by the board of directors, to its shareholders.

Cash Flows

The cumulative total of cash inflows and outflows in a company, influencing its liquid assets.

Revenue

The total amount of income generated by the sale of goods or services related to a company's primary operations.