Which of the Following Statements Is FALSE

question 13

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 net present value (NPV) of changing multiple project parameters.
• C) The difference between the internal rate of return (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 net present value (NPV) calculation into its component assumptions and shows how the net present value (NPV) varies as each one of the underlying assumptions changes.

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