Choose True or False for each of the following statements: 1. Sensitivity analysis is concerned with determining how much variation in financial data, the decision maker can have to affect the economic decision.
Choose True or False for each of the following statements:
1. Sensitivity analysis is concerned with determining how much variation in
financial data, the decision maker can have to affect the economic decision.
2. Useful life is a period of time that yields the minimum equivalent uniform
annual cost of owning and operating as asset.
3. Depreciation is a reduction in value of an asset, which reflects its actual
usage during ownership.
4. In an optimistic estimation of MARR, we expect to see a lower MARR than
that of pessimistic.
5. If one of extreme FW values, i.e., optimistic and pessimistic scenarios, of
an alternative is positive and another one is negative, a go-decision is
made without further analysis.
6. Recovery period refers to the depreciable life of an asset.
7. Spider plot is used to show the amount of changes on the value of more
than one factor at a time.
8. The book value at the end of useful life might not be equal to the salvage
value when declining balance with switchover to the straight line is used.
9. If the annual revenue and annual expenses are increased and decreased by
20% respectively, the present value is not changed.
10. If the book value is less than the salvage value at time period t, there is a
need to set BVt = SV and BVt+1 = BVt+2 = ... = BVN = 0.
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