Sensitivity analysis is used in capital budgeting to
a. Capture income tax consequences.
b. Simulate probabilistic customer reactions to a new product.
c. Estimate a project's internal rate of return (IRR).
d. Determine the optimal contribution margin given a set of resource constraints.
e. Determine the amount that a variable in a decision model (e.g., annual after-tax cash inflows) can change without changing the indicated decision (e.g., acceptance of a project).
e. Determine the amount that a variable in a decision model (e.g., annual after-tax cash inflows) can change without changing the indicated decision (e.g., acceptance of a project).
c. is the incorrect answer (this is what you had put for the HW)
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