1. Sensitivity analysis evaluates the NPV with respect to:
a. Changes in the underlying assumptions.
b. One variable changing while holding the others constant.
c. Different economic conditions.
d. All of the above.
e. None of the above.
2. Sensitivity analysis is conducted by:
a. Holding all variables at their base level and changing the required rate of return assigned to a project.
b. Changing the value of two variables to determine their interdependency.
c. Changing the value of a single variable and computing the resulting change in the current value of a project.
d. Assigning either the best or the worst possible value to every variable and comparing the results to those achieved by the base case.
e. Managers after a project has been implemented to determine how each variable relates to the level of output realized.