Ottomony has analyzed a new type of all-in-one retail center where the NPV of the project has an expected value with a distribution that yields a standard deviation of $25 million. Ottomony came to this conclusion by analyzing the individual input distributions for the project. This analysis is called:
A) a sensitivity analysis.
B) a scenario analysis.
C) a simulation analysis.
D) a horizontal analysis.

Question

Quizplus · Accepted Answer

This analysis is referred to as a simulation analysis because it involves modeling the project and analyzing the range of potential outcomes based on the input distributions. Sensitivity analysis involves examining the impact of changing one variable on the NPV, while scenario analysis involves evaluating the outcomes for a set of specific scenarios. Horizontal analysis is a financial analysis technique that compares historical data with the present or future performance of a company.

Ottomony Has Analyzed a New Type of All-In-One Retail Center