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.

Question

Quizplus · Accepted Answer

Sensitivity analysis is used to assess how different values of an independent variable affect a particular dependent variable under a given set of assumptions. In the context of financial analysis, it often focuses on how changes in a single variable, such as cost inputs or sales volume, can impact a financial metric like net present value (NPV).

Sensitivity Analysis Helps You Determine The