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

Changing one input at a time and measuring the impact on net present value is an example of sensitivity analysis. Monte Carlo simulation involves generating multiple random scenarios to assess the probability of various outcomes, while scenario analysis involves examining the impact of specific combinations of inputs on net present value.

If a Company Decides to Change One Input at a Time