Many financial professionals believe that the best way to determine a projects value is to use the Discounted Cash Flow (DCF) model. One of the challenges in using the DCF model is the potential for forecasting errors arising. Discuss how forecasting errors impact DCF analysis and what one might do to limit these types of errors.

Scenario and sensitivity analysis are important tools in project analysis and evaluation. How might these tools be employed to assist a manager using DCF in project selection? Do you agree or disagree that these tools always provide a benefit to the company using them to determine whether or not to proceed with a project? Explain.

These tools apply not only in the business world but also in the personal world. Think of and describe a situation in which you applied scenario analysis and/or sensitivity analysis in your personal life. Discuss how the application of these tools was beneficial or not.