Sensitivity Analysis Measures a Project's Stand-Alone Risk by Showing How

question 37

True/False

Sensitivity analysis measures a project's stand-alone risk by showing how much the project's NPV (or IRR) is affected by a small change in one of the input variables, say sales.Other things held constant, with the size of the independent variable graphed on the horizontal axis and the NPV on the vertical axis, the steeper the graph of the relationship line, the more risky the project, other things held constant.

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Definitions:

Homeostasis

The process by which living organisms regulate their internal environment to maintain a stable, constant condition for survival.

Ambient Temperature

The air temperature of any object or environment where equipment is stored or operated.

Body Temperature

The measure of the body's ability to generate and get rid of heat; essential for the proper functioning of enzymes and metabolic processes.

Motives

The reasons or desires that drive an individual to act in a certain way.