SENSITIVITY ANALYSIS Flashcards
1
Q
What is sensative analysis
A
A method of assessing the impact of variances in predicted cash inflows and outflows on investment appraisal.
2
Q
Example
A
Example:
Required ARR = 8% (They’re not going to do the investment if the return in the investment is less than 8% provided there were no other qualitative factors preventing them from doing so.
They would do an analysis seeing what the best case scenario was and the worst case scenario
3
Q
A
