QUESTION $38$

are relevant at the firm level. "Critically evaluate this statement.

relevant in the analysis of a project's incremental cash flows according to the stand$-$alone principle.

structure. As a result, the financing costs are relevant in the analysis of a project's incremental cash flows according to the stand$-$alone principle.

QUESTION $39$

projects." Critically evaluate this statement.

after$-$tax cash flows.

increase in taxes impacts the marginal tax rate a firm for the entire fiscal year.

in taxes that would otherwise be paid is the same thing as a cash inflow, so the effects of the depreciation tax shield must be added in to get the total incremental after$-$tax cash flows.

QUESTION $40$

What is the essential difference between sensitivity analysis and scenario analysis?

With a sensitivity analysis, one variable is examined over a broad range of values. With a scenario analysis, all variables are examined for a limited range of values.

With a sensitivity analysis, all variables are examined for a limited range of values. With a scenario analysis, one variable is examined over a broad range of values.