An analysis that breaks the net present value (NPV)calculation into its component assumptions and shows how the net present value (NPV)varies as one of the underlying assumptions changes is called

Question

Quizplus · Accepted Answer

Sensitivity analysis breaks down the component assumptions in the NPV calculation and shows how changes in those assumptions affect the NPV. It is used to assess the sensitivity of the project to changes in key variables such as sales volume, costs, and discount rates. Therefore, sensitivity analysis is the best choice.

An Analysis That Breaks the Net Present Value (NPV)calculation into Its