Sensitivity analysis evaluates projects by:
A)forecasting changes in interest rates that would increase financing costs.
B)recording profitability changes while changing one variable at a time.
C)insuring that the project sponsor has proper incentives.
D)testing for interrelated variables.

Question

Quizplus · Accepted Answer

Sensitivity analysis involves testing how changes in one variable at a time affects the profitability of a project. Therefore, recording profitability changes while changing one variable at a time is the best choice. The other options listed are not directly related to sensitivity analysis.

Sensitivity Analysis Evaluates Projects By