The Difference Between Scenario Analysis and Sensitivity Analysis Is ________

question 88

Multiple Choice

The difference between scenario analysis and sensitivity analysis is ________.

• A) scenario analysis is based upon the internal rate of return (IRR) and sensitivity analysis is based upon net present value (NPV)
• B) only sensitivity analysis allows us to change estimated inputs of net present value (NPV) analysis
• C) scenario analysis considers the effect on net present value (NPV) of changing multiple project parameters
• D) only scenario analysis breaks the net present value (NPV) calculation into its component assumptions

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Definitions:

Wine Barrel

A cylindrical container typically made of oak wood used for the aging, fermentation, or storage of wine, imparting flavors and aiding in the wine's development.

Upstream Cost

Costs incurred before the production process begins, typically involving raw material acquisition and preparation.

Wine Barrels

Large containers traditionally made of oak, used for aging wine and imparting flavors during the winemaking process.

Traditional Cost Management

A cost accounting approach that typically allocates overhead costs based on volume-driven measures, such as machine hours or labor hours.