(3.) How is each type of risk used in the capital budgeting process? Answer: See Chapter 13 Min Show Evaluating Risk: Sensitivity Analysis Sensitivity of NPV and to Variations in Input Variables j. (1.) What is sensitivity analysis? Answer: See Chapter 13 Mini Case Show (2.) Perform a sensitivity analysis on the unit sales, salvage value, and cost of capital for the proj Assume that each of these variables can vary from its base-case, or expected, value by plus and min 20%, and 30%. Include a sensitivity diagram, and discuss the results. Here we use an Excel "Data Table" to find the NPVs for changes in unit sales, salvage value, and WA holding other things constant--changing one variable at a time. This produces the sensitivity analys shown below. We summarize the data tables and show the sensitivity analysis graph below