1.) Scenario analysis:

a.) determines which variable has the greatest impact on a project's net present value.

b.) evaluates a project's net present value while sensitivity analysis evaluates a project's internal rate of return.

c.) presents the absolute worst and absolute best outcome that could ever occur.

d.) determines the impact a $1 change in sales has on the internal rate of return.

e.) can be used to evaluate projects that have unconventional cash flows.

2.) Sensitivity analysis:

		a.) illustrates how an increase in operating cash flow caused by changing both the revenue and the costs simultaneously will change the internal rate of return for a project.
		b.) helps identify the variable within a project that presents the greatest forecasting risk.
		c.) is used for projects that cannot be analyzed by scenario analysis because the cash flows are unconventional.
		d.) is generally conducted prior to scenario analysis just to determine if the range of potential outcomes is acceptable.
		e.) looks at the most reasonably optimistic and pessimistic results for a project.