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:

Price

The amount of money expected, required, or given in payment for something.

Product

An item or service created through a process and offered to the market to satisfy a need or want.

Porter

Refers to Michael E. Porter, a prominent figure in economics and business strategy, known for his theories on competition and the value chain.

Failures of Process

Situations where an established procedure or workflow does not operate as intended, leading to inefficiencies, errors, or undesired outcomes.