Consider the following statement by a project analyst: "I analyzed my project using scenarios for the base case, best case, and
worst case. I computed break evens and conducted sensitivity and simulation analysis. I computed NPV, IRR, the profitability index, and payback. In the end, I have over a hundred different estimates and am more confused than ever. I would have been better off just sticking with my first estimate and going by my gut instinct." Critique this statement.
Answer: It is important to conduct many different experiments and estimates in a project for having as much statistic data as possible, because it is necessary to show proof on whichever project you are into. In order to avoid confusion, it's also possible to <u>organize data in Excel sheets/tables so it can be visually easier to interpretate</u>. <u>Gut instinct isn't enough to prove something wrong or righ</u>t, and <u>few data means higher probability of things going in ways other than the expected</u>.
