Sensitivity analysis: Provides profitability breakeven analysis, Provides direction once a

Sensitivity analysis: Provides profitability breakeven analysis, Provides direction once a

Sensitivity analysis:

1. Provides profitability breakeven analysis,
2. Provides direction once a project has started,
3. Identifies input variables that are most critical,
4. All of the above.
5. The certainty equivalent method:
   1. Adjusts cash flows for risk,
   2. Uses a risk-free discount rate,
   3. Is more difficult to implement than a risk-adjusted discount rate,
   4. All of the above.
7. Which of the following is NOT true regarding capital rationing?
   1. From a financial theory perspective, for for-profit firms there is no basis for it,
   2. Safe projects are always chosen over risky projects,
   3. It refers to having limited capital for projects,
   4. The profitability index is a useful tool.