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Question
Sensitivity analysis is a technique in which:
a. all key input variables are changed to their most likely values to compute a project's net present value (NPV).
b. all of the input variables are set at their most reasonably expected values to computes a project's internal rate of return (IRR).
c. the values of key input variables are changed to observe the resulting changes in a project's net present value (NPV) and its internal rate of return (IRR).
d. a "bad" set and "good" set of financial circumstances are compared with a most likely, or base case, situation.
e. key input variables are set at their worst reasonably forecasted values to compute a project's net present value (NPV).
Answer
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Related questions
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b. False
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Q:
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b. Firms with relatively low debt ratios are exposed to more risk compared to firms with relatively high debt ratios.
c. Firms with relatively high debt ratios have higher expected returns when business is bad.
d. Firms with relatively high debt ratios have higher expected returns when business is good.
e. Firms with relatively low debt ratios have higher expected returns when business is poor.