Sensitivity analysis helps you determine the:
A) Range of possible outcomes given possible ranges for every variable.
B) Degree to which the net present value reacts to changes in a single variable.
C) Net present value given the best and the worst possible situations.
D) Degree to which a project is reliant upon the ﬁxed costs.
E) Level of variable costs in relation to the ﬁxed costs of a project.

Question

Quizplus · Accepted Answer

Sensitivity analysis helps determine how changes in a single variable affect the net present value. It does not necessarily provide a range of possible outcomes for every variable (option A), or the best and worst possible situations (option C). Sensitivity analysis also does not measure reliance on fixed costs (option D) or compare variable costs to fixed costs (option E).

Sensitivity Analysis Helps You Determine The