Which of the Following Correctly Describes Sensitivity Analysis

question 38

Multiple Choice

Which of the following correctly describes sensitivity analysis?

• A) recalculation of project NPV by changing several inputs to new but consistent values.
• B) measures the degree to which fixed costs magnify the effect on profits of a shortfall in sales.
• C) analysis of how project NPV changes if different assumptions are made about key variables.
• D) measures the future level of sales at which NPV equals zero.

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Definitions:

Five-Speed

A transmission configuration with five forward gear ratios, providing a balance between performance and fuel efficiency in vehicles.

Modulator Pressure

The pressure within an automatic transmission's hydraulic system that helps control shifting by modulating the engagement of clutches and brake bands.

Running Conditions

The operational state of a machine, vehicle, or system under normal, intended use.

Engine Rpm

Engine revolutions per minute (RPM) measures how many times the engine's crankshaft completes a full rotation each minute, indicating the engine's operational speed.