Sensitivity analysis is a procedure that can be used in the capital budgeting process to indicate how sensitive the
Is to changes in a particular variable.
A)probability
B)return distribution
C)net present value
D)standard deviation

Question

Quizplus · Accepted Answer

Sensitivity analysis is used to determine how sensitive the net present value (NPV) of a project is to changes in particular variables such as sales volume, cost of goods sold, or discount rate. By altering these variables, analysts can determine the impact on the overall NPV of the project and determine whether or not to proceed with the investment. The other answer options (A, B, and D) are not directly related to sensitivity analysis in capital budgeting.

Sensitivity Analysis Is a Procedure That Can Be Used in the Capital