Question

Sensitivity analysis:A. is more difficult to conduct than simulation analysis.B. provides its user with the rate of return that corresponds to the project's IRR.C. is affected primarily by the interrelationships between project variables.D. indicate which variables need to be most closely monitored.E. provides limited information and therefore is rarely used in practice.

Answer 1

Answer: C. is affected primarily by the interrelationships between project variables

Explanation: Sensitivity Analysis is a study which helps identify the effects of a set of independent variables on some dependent variable under certain predetermined conditions. It aids in identifying the changes in a given variable. But doesn't consider probability of such a change occuring. It aids decision making due to information it provides from comparing variables in a project.