Which of the following statements is FALSE?
A)Sensitivity analysis allows us to explore the effects of errors in our estimated inputs in our NPV analysis for the project.
B)To compute the NPV for a project,you need to estimate the incremental cash flows and choose a discount rate.
C)Estimates of the cash flows and cost of capital are often subject to significant uncertainty.
D)When we are certain regarding the input to a capital budgeting decision,it is often useful to determine the break-even level of that input.

Question

Quizplus · Accepted Answer

When we are certain about an input, determining a break-even level is unnecessary because break-even analysis is used to understand the impact of uncertainty or variability in inputs.

Which of the Following Statements Is FALSE