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The Difference Between Scenario Analysis and Sensitivity Analysis Is

Question 89

Multiple Choice

The difference between scenario analysis and sensitivity analysis is:

A) Scenario analysis is based upon the internal rate of return (IRR) and sensitivity analysis is based upon net present value (NPV) .
B) Only sensitivity analysis allows us to change our estimated inputs of our net present value (NPV) analysis.
C) Scenario analysis considers the effect on net present value (NPV) of changing multiple project parameters.
D) Only scenario analysis breaks the net present value (NPV) calculation into its component assumptions.
E) Sensitivity analysis allows for variations in many of the underlying assumptions simultaneously.

Correct Answer: