An investigation of the degree to which NPV depends on assumptions made about any singular critical variable is called a(n):
A)operating analysis.
B)sensitivity analysis.
C)marginal beneﬁt analysis.
D)decision tree analysis.
E)None of the above.

Question

Quizplus · Accepted Answer

A sensitivity analysis specifically examines how changes in a single variable can affect the overall net present value (NPV) calculation. Operating analysis, marginal benefit analysis, and decision tree analysis all involve different types of analyses but do not specifically focus on the impact of a single critical variable on NPV.

An Investigation of the Degree to Which NPV Depends on Assumptions