Explain how sensitivity analysis for a project NPV deals with risk In the following diagram, which input variable causes the most risk (causes most sensitivity) in the project NPV 40,000 30,000 Sales Price Variable Cost Growth Rate Units Sold Fixed Cost WACC 20,000 10,000 NPV ($) (10,000) (20,000) (30,000) 30 30 15 15 Deviation from Base Case Value ( )

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Question: Explain how sensitivity analysis for a project NPV deals with risk. In the following diagram, which input variable causes the most risk (causes most sensitivity)

Explain how sensitivity analysis for a project NPV deals with risk. In the following diagram, which input variable causes the most risk (causes most sensitivity) in the project NPV?

Explain how sensitivity analysis for a project NPV deals with risk.

40,000 30,000 Sales Price Variable Cost Growth Rate Units Sold Fixed Cost WACC 20,000 10,000 NPV ($) (10,000) (20,000) (30,000) -30 30 -15 15 Deviation from Base-Case Value (%)

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