Which of the following statements is most correct? Sensitivity analysis is incomplete because...
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Which of the following statements is most correct? Sensitivity analysis is incomplete because it fails to consider the range of likely values of key variables as reflected in their probability distributions. In comparing two projects using sensitivity analysis, the one with the steeper lines would be considered less risky, because a small error in estimating a variable, such as unit sales, would produce only a small error in the project's NPV The primary advantage of simulation is that it provides a very accurate point estimate of a project's NPV One important benefit of simulation analysis as compared to scenario analysis, is that once the analysis is complete, it provides a clear acceptreject decision rule. Answers c and d are both correct
Which of the following statements is most correct?
Sensitivity analysis is incomplete because it fails to consider the range of likely values of key variables as reflected in their probability distributions.
In comparing two projects using sensitivity analysis, the one with the steeper lines would be considered less risky, because a small error in estimating a variable, such as unit sales, would produce only a small error in the project's NPV
The primary advantage of simulation is that it provides a very accurate point estimate of a project's NPV
One important benefit of simulation analysis as compared to scenario analysis, is that once the analysis is complete, it provides a clear acceptreject decision rule.
Answers c and d are both correct
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