Theoretically,the NPV is the most appropriate method to determine the acceptability of a project.A false sense of security can overwhelm the decision-maker when the procedure is applied properly and the positive NPV results are accepted blindly.Sensitivity and scenario analysis aid in the process by:

Question

Quizplus · Accepted Answer

Sensitivity and scenario analysis can help decision-makers identify areas where their assumptions may be incorrect, where more data is needed, and how unexpected events could impact the project's financial results. By integrating these analyses into the decision-making process, decision-makers can better understand the risks and uncertainties associated with the project, leading to more informed decision-making.

Theoretically,the NPV Is the Most Appropriate Method to Determine the Acceptability