Astroscope Tours finds that if it were to increase its price by 10 percent, it would have a 6 percent reduction in the NPV of its new 3-Hour Tour. Considering other things to be unchanged, Astroscope's analysis could be described as:
A) Monte Carlo simulation.
B) break-even analysis.
C) sensitivity analysis.
D) variance analysis.

Question

Quizplus · Accepted Answer

The analysis conducted by Astroscope Tours is a sensitivity analysis, as it examines how a change in the price of the tour (one variable) would impact the NPV (outcome variable) while holding other factors constant. This type of analysis helps companies to understand the relative importance or sensitivity of different variables and how changes in those variables can affect their bottom line. Monte Carlo simulation involves the use of mathematical algorithms to model a range of possible outcomes, while break-even analysis and variance analysis are not relevant to this scenario.

Astroscope Tours Finds That If It Were to Increase Its