In which of the following do we change one variable while holding the other variables constant to examine the impact on the NPV of a project?

Question

Quizplus · Accepted Answer

Sensitivity analysis involves changing one variable while holding the rest constant in order to assess its impact on the project's NPV. In contrast, NPV break-even analysis is used to determine the level of sales needed to just cover the costs of the project. Real option valuation is a method of valuing options embedded in a project, while scenario analysis examines the impact of multiple variables changing simultaneously.

In Which of the Following Do We Change One Variable