________ breaks the NPV calculation down into its component assumptions,showing how the NPV varies as the values of the underlying assumptions change.
A) Scenario analysis
B) Cost benefit analysis
C) Break-even analysis
D) Sensitivity analysis

Question

Quizplus · Accepted Answer

Sensitivity analysis is a technique that breaks down the NPV calculation into its underlying assumptions and the extent to which changes in those assumptions affects the NPV. This helps in understanding the various scenarios and making more informed decisions. The other options, such as scenario analysis, cost benefit analysis, and break-even analysis, do not specifically deal with the analysis of assumptions and their impact on NPV.

________ Breaks the NPV Calculation Down into Its Component Assumptions,showing