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 can be difficult to define the range of outcomes.
D) the cost of conducting the analysis is excessive.

Question

Quizplus · Accepted Answer

One of the main challenges in sensitivity analysis is defining the range of potential outcomes for the variables being analyzed. This can often be subjective and difficult to determine, leading to potential inaccuracies in the analysis. The other options are incorrect; NPVs can change based on changing assumptions, projects can have varying levels of sensitivity to different variables, and the cost of the analysis is subjective and dependent on the specific project and approach used.

One of the Problems Inherent in Sensitivity Analysis Is That