Which one of the following appears to be a more likely result from using sensitivity analysis?
A) Agreement on the appropriate discount rate
B) Determination of whether to finance with debt or equity
C) Isolation of the pivotal factor in project profitability
D) Selection of the best capital budgeting project

Question

Quizplus · Accepted Answer

Sensitivity analysis is used to determine the degree of impact of a change in a particular variable on the profitability of a project. Therefore, the isolation of the pivotal factor in project profitability is a more likely result of using sensitivity analysis compared to the other options listed. Agreement on the appropriate discount rate, determination of whether to finance with debt or equity, and selection of the best capital budgeting project are typically determined through other financial analysis techniques.

Which One of the Following Appears to Be a More