The main benefit of sensitivity analysis is: a. It provides unambiguous results.
ID: 2821108 • Letter: T
Question
The main benefit of sensitivity analysis is:
a.
It provides unambiguous results.
b.
It recognizes underlying variables are likely interrelated.
c.
All of these statements are drawbacks of sensitivity analysis.
d.
It can help identify the project's most important variables.
a.
It provides unambiguous results.
b.
It recognizes underlying variables are likely interrelated.
c.
All of these statements are drawbacks of sensitivity analysis.
d.
It can help identify the project's most important variables.
Explanation / Answer
The main benefit of sensitivity analysis is:
ANSWER : d : It can help identify the project's most important variables. (THUMBS UP PLEASE)
BY employing senstivity analysis, we can check how each variable is connected with final results
for example, we can check change in NPV by changing units sold and by changing variable cost.
it will tell us which variable is most likely to influence the NPV and thereby help in making decisions
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