Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Define sensitivity analysis
Expert Solution
Sensitivity Analysis:
The process to evaluate the effect of change in one variable on the end result of a project is called sensitivity analysis. It reflects the change in net present value with respect to change in an input unit with other variables remain constant.
Uses of Sensitivity Analysis:
Sensitivity analysis is used to know the effect of any possible change on the end result. So, the input used is changed and the analysis will show the updated result.
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