The Objective of Sensitivity Analysis in Capital Budgeting Is to Determine

question 42

True/False

The objective of sensitivity analysis in capital budgeting is to determine how sensitive the NPV is to alternative values of the input variables.

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Definitions:

Delivery Term

Refers to the conditions in a sales contract that outline the specifics of how and when the goods will be delivered to the buyer.

CFR

An abbreviation for "Code of Federal Regulations," which is a collection of the general and permanent rules published in the Federal Register by the departments and agencies of the Federal Government.

FOB

Free on Board, a shipping term used to indicate whether the seller or buyer is responsible for goods damaged or destroyed during shipping.

Excess Capacity

A situation where a business produces less than it is actually capable of because there is not enough demand for its product or service.