Which of the Following Statements Is FALSE

question 67

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:

Economic Production Quantity

A model that determines the optimal quantity of a product to produce, minimizing total holding and setup costs.

Setup Time

The time required to prepare a machine or process for production.

Lot Size

It denotes the quantity of units produced or ordered in a single batch, influenced by considerations like cost and demand.

JIT Policies

Just-In-Time Policies; strategies aimed at minimizing inventory and reducing waste by receiving goods only as they are needed in the production process.