Which of the following best describe the term scenario analysis.

A) Investigation of what happens to NPV when only one variable is changed.
B) The determination of what happens to NPV estimates when we ask what-if questions.
C) The degree to which a firm or project relies on fixed costs.
D) The change in costs that occurs when there is a small change in output.
E) Taking into account the managerial options that are implicit in a project.

Question

Megan Bujko · Accepted Answer

Final Answer : B, Explanation :  Scenario analysis involves asking what-if questions to determine the impact on NPV estimates under different scenarios, making it a tool for assessing the potential outcomes of a project under various conditions.

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