Theoretically, the NPV is the most appropriate method to determine the acceptability of a project.A false sense of security can overcome the decision-maker when the procedure is applied properly but the positive NPV results are accepted blindly.Sensitivity and scenario analysis aid in the process by:
A)changing the underlying assumptions on which the decision is based.
B)highlights the areas where more and better data are needed.
C)providing a picture of how an event can affect the calculations.
D)All of the above.
E)None of the above.

Question

Quizplus · Accepted Answer

Sensitivity and scenario analysis can help decision-makers by changing underlying assumptions, highlighting where more data is needed, and showing how events can impact the calculations. By using these tools in addition to the NPV method, decision-makers can avoid blindly accepting positive NPV results and gain a more comprehensive understanding of the project's potential risks and opportunities.

Theoretically, the NPV Is the Most Appropriate Method to Determine