Which of the following best describes the general motivation for considering all of tools and concepts discussed in Chapter $11($Project Analysis and Evaluation$)?$

A$.$ When a company is faced with a decision of whether to invest in a project, it is important to consider Net Present Value $($NPV$),$ but also to ensure that the project is able to at least break$-$even on an accounting basis, and that its operating leverage is not too high. Scenario and sensitivity analysis should be conducted to ensure that all criteria are met.

B$.$ Evaluation of a project using Net Present Value $($NPV$)$ analysis requires estimation of future cash flows, which are based on many uncertain variables. In order to ensure our calculations are correct, it is important that we consider many different scenarios involving these variables, and choose the best one to ensure that our forecasts are correct.

C$.$ Evaluation of a project using Net Present Value $($NPV$)$ analysis requires estimation of future cash flows, which are based on many uncertain variables, including: future quantity, future price, future costs, etc. We need to consider how errors in our forecasting of these variables might affect our estimate of NPV$,$ and therefore our decision about whether to invest in a project.

D$.$ Net Present Value $($NPV$)$ is only way to think about the viability of an investment. More sophisticated analysis is required to ensure that firms choose the optimal level of operating leverage, and that the investment is able to generate a positive net income. Scenario and sensitivity analyis help to reduce the forecasting risk on such analysis.