BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Optimistic Rate-Pessimistic Rate
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Optimistic Rate-Most Likely Rate
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Most Likely Rate-Pessimistic Rate
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Most Likely Rate-Optimistic Rate
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Detailed explanation-1: -Graphically, the range of feasibility is determined by finding the values of a right hand side coefficient such that the same two lines that determined the original optimal solution continue to determine the optimal solution for the problem.
Detailed explanation-2: -The range of optimality for each coefficient provides the range of values over which the current solution will remain optimal. Managers should focus on those objective coefficients that have a narrow range of optimality and coefficients near the endpoints of the range.
Detailed explanation-3: -The sensitivity is calculated by dividing the percentage change in output by the percentage change in input.
Detailed explanation-4: -The sensitivity analysis is based on the variables that affect valuation, which a financial model can depict using the variables’ price and EPS. The sensitivity analysis isolates these variables and then records the range of possible outcomes.