You want to determine how changes in the price of a product affect a project's NPV and IRR. To best determine the impact, you would most likely use ____________.
A) Scenario analysis.
B) Sensitivity analysis.
C) Base-case analysis.
D) Simulation analysis.
E) Multiple-outcome analysis.

Question

Quizplus · Accepted Answer

Sensitivity analysis is the most appropriate tool for assessing how changes in a single input variable, such as the price of a product, affect the outcome measures like NPV (Net Present Value) and IRR (Internal Rate of Return). It helps in understanding the sensitivity of the project's financial viability to changes in key assumptions.

You Want to Determine How Changes in the Price of a Product