An Analysis That Breaks the NPV Calculation into Its Component

question 13

Multiple Choice

An analysis that breaks the NPV calculation into its component assumptions and shows how the NPV varies as one of the underlying assumptions is changed is called:

• A)scenario analysis.
• B)IRR analysis.
• C)accounting break-even analysis.
• D)sensitivity analysis.

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Definitions:

Journal Entry

A record in the books of accounts that represents a business transaction and its effect on the company's financial position.

Accounts

Financial records of a company's transactions, maintaining detailed information about revenue, expenses, assets, liabilities, and equity.

Dividends Declared

Profits that a company's board of directors has decided to distribute to its shareholders, usually in the form of cash payments or additional shares.

Shareholders' Equity

The remaining value of a company's assets after liabilities are subtracted, which signifies the ownership stake of the shareholders.