Which Approach Estimates NPV by Changing the Value of Several

question 28

Multiple Choice

Which approach estimates NPV by changing the value of several assumptions at once to represent possible outcomes of the project?

• A) Forecasting simulation
• B) Monte Carlo simulation
• C) Sensitivity analysis
• D) Scenario analysis

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Definitions:

Vendor

An entity or person that supplies goods or services to another company, often part of the supply chain.

Depreciation

The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life.

Horizontal Analysis

A method of financial analysis in which items on financial statements over multiple periods are compared.

International Segments

Parts of a company that operates in different countries outside of the company's home country, often analyzed separately in financial reports to assess performance.