At times, when a company is considering an alternative such that a set of variables affecting a project are interrelated, then analysis that considers this interrelation could be performed. This is called
A) a sensitivity analysis.
B) a scenario analysis.
C) a Monte Carlo simulation.
D) none of the above.

Question

Quizplus · Accepted Answer

A scenario analysis is used to evaluate the possible outcomes of a decision when multiple interrelated variables are at play. It involves imagining multiple possible scenarios and measuring the effect that each scenario would have on the project. Sensitivity analysis is used to determine how changes in one variable would affect the overall outcome of the project, and a Monte Carlo simulation is used to model the possible outcomes of a decision. However, in this case, the question specifically mentions interrelated variables, which suggests the need for a scenario analysis. Therefore, the best choice is B.

At Times, When a Company Is Considering an Alternative Such