Question

Scenario analysis: helps determine the reasonable range of expectations for a project's anticipated outcome. determines which variable has the greatest impact on a project's net present value. determines the impact a $1 change in sales has on a project's internal rate of return. determines the absolute worst and absolute best outcome that could ever occur. evaluates a project's net present value while sensitivity analysis evaluates a project's internal rate of return.

Answer 1

Answer : A

Scenario Analysis is somewhat like a what-if analysis - i.e. it assess the outcome of a project by varying the key inputs for revenues and costs to arrive at a reasonable range for a project's anticipated outcome. Companies may alter several key variables at the same time to arrive at a scenario or scenarios.