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Which One of These Is a Disadvantage of Sensitivity Analysis

Question 23

Multiple Choice

Which one of these is a disadvantage of sensitivity analysis?


A) Sensitivity analysis may decrease the false sense of security among managers.
B) Sensitivity analysis fails to identify the key variable that affects a project's net present value.
C) Each variable in sensitivity analysis is treated in isolation.
D) A sophisticated computer program is required to conduct sensitivity analysis.
E) Sensitivity analysis assumes most variables will achieve their most optimistic value.

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