The manufacturer of a brand of kitchen knives is investigating the likely effects that an increase in the cost of the raw materials required to make these knives will have on the cost of manufacturing the knives, the selling price of the knives, the number of knives that will then be sold, and the project's net present value (NPV). Which of the following best describes what type of analysis the manager is performing?

Question

Quizplus · Accepted Answer

The manager is performing scenario analysis, which involves examining the potential outcomes of different scenarios, in this case an increase in raw material costs, on a project's financial metrics such as cost of manufacturing, selling price, number of units sold, and NPV. The other options listed do not accurately describe the type of analysis being performed.

The Manufacturer of a Brand of Kitchen Knives Is Investigating