Question

You are asked to perform an analysis of the impact of expansion on the company’s Net Present Value.

1. Fully define Sensitivity Analysis and provide examples.

2. Fully define Scenario Analysis and provide examples.

3. What are the basic differences between the Sensitivity Analysis technique and the Scenario Analysis technique?

Answer 1

/let pnesent value .- 형 subhaacļin cash outflow。 he companufnompresent value Net presnt value(NPW's Net pme sent vae d'eri'ved cash outtlow o va lue of futuoe ca sh low of the compan pansion wil cost money esulin in cash ouftbw/and w ate additional nesounces utune inf lowS it othe copay Funthe expansion of pmojectヴequines capital and 92e sul s in incneased nisk lon the company which pushed up discounif nale used o discouning ature cash loo efetivey meansony may neeid SCoL nate use uturie Cas highen u+wne int lows to offse 刁 VI malySis an exampleS Ans is defined as technique used b detenmive how diftenent values of an indepe nden/ vaiia ble icula7 outcome unde ~Aven set of im assumptions incxample_%u want to know impact of lOY Psice incnease on Ye↓ income the company his case can change the pice

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