If a firm were interested in knowing the effect of a single input change on the net present value of a project, then the firm would most likely want to perform

Question

Quizplus · Accepted Answer

Sensitivity analysis is a method used to determine how changes in an input variable affect the output of a model. Therefore, if a firm is interested in knowing the effect of a single input change on the net present value of a project, sensitivity analysis would be the best choice. Scenario analysis and Monte Carlo simulations are useful for analyzing the impact of multiple input changes or uncertainties, but they may not provide a clear indication of the impact of a single input change.

If a Firm Were Interested in Knowing the Effect of a Single