Asked by
Carlsen Fortuno
on Nov 07, 2024
Verified
Which of the following is NOT correct?
A) Forecasting risk is the possibility that errors in projected cash flows lead to incorrect decisions
B) Scenario analysis is the determination of what happens to NPV estimates if we ask what-if questions
C) Sensitivity analysis is an investigation of what happens to NPV when only one variable is changed
D) Simulation analysis is a combination of scenario and sensitivity analysis
E) Fixed costs are costs that change when the quantity of output changes during a particular time period
Fixed Costs
Fixed overheads that are unaffected by changes in production or sales volume, like rental costs, payroll, and insurance charges.
- Comprehend the effects of modifications in fixed and variable expenses on an organization's operational leverage.
- Understand the principle of predicting financial risk and its effects on Net Present Value calculations.
- Discover the techniques and value of scenario, sensitivity, and simulation analysis in evaluating project consequences.
Verified Answer
JA
Learning Objectives
- Comprehend the effects of modifications in fixed and variable expenses on an organization's operational leverage.
- Understand the principle of predicting financial risk and its effects on Net Present Value calculations.
- Discover the techniques and value of scenario, sensitivity, and simulation analysis in evaluating project consequences.
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