An analysis of what happens to NPV estimates when we ask what-if questions is called:
A) Forecasting analysis.
B) Scenario analysis.
C) Sensitivity analysis.
D) Simulation analysis.
E) Break-even analysis.

Question

Quizplus · Accepted Answer

Scenario analysis is a technique used to evaluate the impact of different assumptions on the NPV of a project. It involves creating multiple scenarios, each with different assumptions about the project's cash flows, and then calculating the NPV for each scenario. This allows the analyst to see how the NPV of the project is affected by changes in the assumptions.

An Analysis of What Happens to NPV Estimates When We