Using a computer model to repeatedly vary the combination of project variables in order to compare NPVs is called:
A)scenario analysis.
B)sensitivity analysis.
C)NPV break-even analysis.
D)simulation analysis.

Question

Quizplus · Accepted Answer

The process of repeatedly varying project variables using a computer model to compare NPVs is known as simulation analysis. This involves creating multiple scenarios to determine the range of potential outcomes and helps in assessing the risks involved in a project. Option A refers to analyzing the impact of changing one variable at a time, while option B involves testing the sensitivity of the model to different inputs. Option C involves calculating the point at which a project's NPV becomes positive.

Using a Computer Model to Repeatedly Vary the Combination of Project