The difference between scenario analysis and sensitivity analysis is

Question

Quizplus · Accepted Answer

Scenario analysis considers the effect on net present value (NPV) of changing multiple project parameters, while sensitivity analysis looks at the effect of changing only one variable. Scenario analysis breaks the NPV calculation into its component assumptions, but this is not the key difference between the two techniques. A is incorrect because sensitivity analysis does not allow us to change estimated inputs of our NPV analysis. D is also incorrect because both scenario analysis and sensitivity analysis can be based on either IRR or NPV.

The Difference Between Scenario Analysis and Sensitivity Analysis Is