Which of the following project risk analyses is best able to analyze the effect of a single input, uncorrelated with other inputs, on the NPV of a project?
A) Sensitivity analysis
B) Scenario analysis
C) Simulation analysis
D) Horizontal analysis

Question

Quizplus · Accepted Answer

Sensitivity analysis is the best choice to analyze the effect of a single input on NPV. It measures how changes in one variable affect the project's outcome, keeping other variables constant. This method is best suited for analyzing uncorrelated input variables. Scenario analysis and simulation analysis are better suited for analyzing multiple inputs and the interaction between them, while horizontal analysis is used to compare financial data over time.

Which of the Following Project Risk Analyses Is Best Able