What is the effect of conducting a sensitivity analysis in capital budgeting?

Question

Quizplus · Accepted Answer

Conducting a sensitivity analysis in capital budgeting helps analysts to determine if results are particularly affected by specific estimates. This allows for better decision making and more accurate predictions of outcomes for the chosen investment alternative. B and C are not accurate as sensitivity analysis does not necessarily complicate the decision-making process or change preferences for one alternative over another.

What Is the Effect of Conducting a Sensitivity Analysis in Capital