After completing a net present value (NPV) calculation on a proposed project, an analyst explores the change in NPV with changes in the interest rate. This additional analysis is referred to as:
A) Decision analysis.
B) Simula-tion.
C) Sensitivity analysis.
D) Variance analysis.

Question

Quizplus · Accepted Answer

Sensitivity analysis involves changing one variable at a time to see how it affects the outcome, such as NPV, to understand the impact of changes in key assumptions.

After Completing a Net Present Value (NPV) Calculation on a Proposed