Sensitivity analysis: A) provides the tradeoff between fixed and variable costs. B) provides an estimate of...
Sensitivity analysis:
A) provides the tradeoff between fixed and variable costs.
B) provides an estimate of the most profitable situation that is reasonably expected.
C) can be conducted on any input value used in the computation of a project’s NPV.
D) cannot evaluate a change in NPV related to a project’s initial investment.
E) should never be conducted if the base-case scenario results in a negative NPV.
Homework Answers
The correct answer is option c i.e. Sensitivity analysis can be conducted on any input value used in the computation of a project’s NPV.
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