Question: How can sensitivity analysis be incorporated in DCF analysis? A. Sensitivity analysis can be incorporated into DCF analysis by examining how the DCF of each

How can sensitivity analysis be incorporated in DCF analysis?

Sensitivity analysis can be incorporated into DCF analysis by examining how the DCF of each project changes with changes in the inputs used. These could include changes in revenue assumptions, cost assumptions, tax rate assumptions, and discount rates.

Sensitivity analysis can be incorporated into DCF analysis by applying sensitivity analysis in capital budgeting decisions. This could be done by varying each of the inputs to the NPV calculation by a certain percentage and assessing the effect of the change on the project's NPV.

Sensitivity analysis can be incorporated into DCF analysis by helping managers to focus on decisions that are most sensitive to different assumptions and to worry less about decisions that are not so sensitive.

All of the above are correct.

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