In a sensitivity graph that examines the present worth of a project, the slope of a line shows
A)how sensitive a project's benefit-cost ratio is to changes in its inputs: the steeper, the more sensitive.
B)how sensitive a project's PW is to changes in its inputs: the steeper, the more sensitive.
C)how sensitive a project's benefit-cost ratio is to changes in its inputs: the flatter, the more sensitive.
D)how sensitive a project's PW is to changes in its inputs: the flatter, the more sensitive.
E)how sensitive the project's IRR is to changes in its inputs: the flatter, the more sensitive.

Question

Quizplus · Accepted Answer

The slope of a line in a sensitivity graph that examines the present worth (PW) of a project indicates how sensitive the project's PW is to changes in its inputs. A steeper slope means the project's PW is more sensitive to changes.

In a Sensitivity Graph That Examines the Present Worth of a Project