Quiz Ch 12 – T/F Assessing Project Risk through Sensitivity Analysis
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
True or false: Sensitivity analysis gauges a project’s individual risk by illustrating the impact of small changes in input variables, like sales, on NPV (or IRR). When holding other factors constant, a steeper line on a graph—representing the relationship between the variable size and NPV—indicates higher project risk.