If a firm wanted to find the effect of a change in the variable cost per unit of production on the net present value of a project, then the firm might perform

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Quizplus · Accepted Answer

Sensitivity analysis is the best choice as it allows the firm to determine how changes in a specific variable, in this case variable cost per unit of production, would impact the net present value of the project. This can be done by changing the specific variable and observing the corresponding changes in the net present value. A scenario analysis involves considering multiple variables and their impact on the project's outcome, while a Monte Carlo simulation involves running multiple simulations with varying inputs to determine the potential outcomes.

If a Firm Wanted to Find the Effect of a Change