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:

Capability

The ability or qualities necessary to do something or achieve a particular result.

Telecommunication Linkages

Connections established through electronic systems or networks that facilitate the transfer of data and information over distances.

Remote Location

A place situated far from the main centers of population or operation, often requiring digital connectivity for communication.

Performance Appraisal

The systematic evaluation of an employee's performance in their job role, often used for developmental or reward decisions.