One of the problems inherent in sensitivity analysis is that:
A) NPVs do not change once a project is introduced.
B) most projects are equally sensitive to all variables.
C) it ignores any interrelationships between variables.
D)the cost of conducting the analysis is excessive.

Question

Quizplus · Accepted Answer

Sensitivity analysis assumes that each variable is independent of the others, which may not always be the case. If there are interrelationships between variables, the analysis may not accurately predict the impact of each variable in isolation.

One of the Problems Inherent in Sensitivity Analysis Is That