Which approach enables analysts to assess how sensitive NPV is to changes in component values?
A) Probability analysis
B) If- What calculations
C) Sensitivity analysis
D) Discount cash flow calculations

Question

Quizplus · Accepted Answer

Sensitivity analysis is the approach that enables analysts to assess how sensitive NPV is to changes in component values. Sensitivity analysis involves changing one input at a time while keeping all other inputs constant and observing the effect on the output, which in this case is the NPV. This helps analysts to understand the key drivers of the NPV and identify the most critical inputs.

Which Approach Enables Analysts to Assess How Sensitive NPV Is