If a company decides to change one input at a time in its net present value analysis,in order to measure the NPV impact of such a change then the firm is performing

Question

Quizplus · Accepted Answer

The company is performing a sensitivity analysis by changing one input at a time to measure the impact on NPV. Monte Carlo simulation involves multiple input changes and random variations, while scenario analysis involves testing different possible scenarios with multiple input changes. Therefore, the best choice is C, sensitivity analysis.

If a Company Decides to Change One Input at a Time