Sensitivity analysis provides information on: I - whether the NPV should be trusted and may provide a false sense of security if all NPVs are positive.
II - the need for additional information as it tests each variable in isolation.
III - the degree of diﬃculty in changing multiple variables together.

Question

Quizplus · Accepted Answer

Sensitivity analysis helps in understanding the reliability of the Net Present Value (NPV) by showing how changes in one variable at a time affect the outcome, thus indicating if further information is needed for a more accurate analysis. It does not directly address the difficulty of changing multiple variables together.

Sensitivity Analysis Provides Information On: I - Whether the NPV