Project analysis, beyond simply calculating NPV, includes the following procedures:
A)sensitivity analysis only.
B)sensitivity analysis and break-even analysis only.
C)sensitivity analysis, break-even analysis, and Monte Carlo simulation.
D)sensitivity analysis, break-even analysis, Monte Carlo simulation, and scenario analysis.

Question

Quizplus · Accepted Answer

Project analysis should go beyond simply calculating NPV, and should include sensitivity analysis, break-even analysis, Monte Carlo simulation, and scenario analysis. Sensitivity analysis helps to identify the most critical factors affecting the project’s performance, while break-even analysis helps to determine the level of sales or revenue required to cover the project's costs. Monte Carlo simulation is used to create multiple scenarios of potential project outcomes based on a range of different variables and assumptions, while scenario analysis helps the project team to anticipate and prepare for potential risks and challenges that may arise during project execution. By incorporating all of these techniques, project managers can develop a more comprehensive understanding of a project's potential risks and rewards, and make better-informed decisions about whether to proceed with the project.

Project Analysis, Beyond Simply Calculating NPV, Includes the Following Procedures