The role of sensitivity analysis is to:
A) determine the amount of variation in key variables (e.g., output, revenues, or expenses).
B) determine how much key variables can change before an investment will fail to meet financial targets.
C) forecast future discount rates.
D) recommend the projects to be pursued and rejected.

Question

Quizplus · Accepted Answer

Sensitivity analysis is used to determine how much key variables can change before an investment will fail to meet financial targets, helping assess the risk and robustness of a project.

The Role of Sensitivity Analysis Is To