Asked by Jasmine Renteria on Jun 29, 2024
Verified
An analysis of what happens to NPV estimates when many variables take on many different values simultaneously is called:
A) Forecasting analysis.
B) Scenario analysis.
C) Sensitivity analysis.
D) Simulation analysis.
E) Break-even analysis.
Simulation Analysis
is a method used in risk management to model possible outcomes of a decision by manipulating variables within mathematical or computer simulations.
NPV Estimates
Projections or calculations of the Net Present Value for different investments or projects to aid in decision-making.
- Recognize the strategies and importance of scenario, sensitivity, and simulation analysis in the assessment of project outcomes.
Verified Answer
DG
Danielle GriffinJul 05, 2024
Final Answer :
D
Explanation :
Simulation analysis is the correct answer because it involves assessing the impact on the Net Present Value (NPV) when multiple variables change simultaneously, often using computer models to simulate different scenarios and their outcomes.
Learning Objectives
- Recognize the strategies and importance of scenario, sensitivity, and simulation analysis in the assessment of project outcomes.
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