The Difference Between Scenario Analysis and Sensitivity Analysis Is That

question 37

Multiple Choice

The difference between scenario analysis and sensitivity analysis is that

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

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Definitions:

Interval Data

A type of numerical data where the difference between two values is meaningful, but there is no true zero point, allowing for comparisons of differences but not ratios.

Nominal Responses

Answers to survey questions that are categorized into groups without any inherent numerical value or order.

Ordinal Responses

Data that represent categories with a meaningful order but not necessarily equidistant intervals between categories.

Interval Responses

Responses or data that range within a specific interval, often used in surveys or statistical analysis to understand distribution or preference.