Sensitivity study is technique

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Reference no: EM132059058

1. Which of the following statements is (are) the most correct?

A. Sensitivity study is a technique in which key variables are changed one at a time.

B. Scenario study is a technique in which “bad” and “good” sets of financial circumstances are compared with a most likely situation.

C. Monte Carlo Simulation is a technique in which probable future events are simulated on a computer.

D. Breakeven is a technique to determine the level of sales at which a project would just break even.

E. All the above are correct.

2. Which of the following statements is most correct?

a. If two projects are mutually exclusive, we should accept the project with long payback period and reject the project with short payback period.

b. If decision with internal rate of return (IRR) is conflicting with decision with net present value (NPV), we should follow NPV.

c. If Project A has a higher IRR than Project B, then Project A must also have a higher NPV.

d. Answers a and b are correct.

e. Answers a and c are correct.

Reference no: EM132059058

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