Question: 6. Sensitivity and scenario analysis Different techniques for a nalyzing project risk require different input variables and assumptions. The procedure in which a set of


6. Sensitivity and scenario analysis Different techniques for a nalyzing project risk require different input variables and assumptions. The procedure in which a set of key elements affecting the expected value are changed to study the effect on the expected value is called analysis. : analyst. She is conducting a sensitivity analysis to evaluate the riskiness of a new project that her company is considering investing in. 'sis report includes the sensitivity curve shown on the graph. This curve implies that the project is very sensitive to changes in units sold. The project's NPV is likely to become negative if the number of units sold decreases by Along with th ity analysis, Diana is including a scenario analysis for the project in her report, giving the probability of the project generating a negative NPV ort includes the following information about the scenario analysis: Complete the missing information in Diana's report: The expected net present value of the project is Standard deviation of the net present value (the NPV of the project is likely to vary by) million
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