5. Measuring stand-alone risk When projects involve certain, or constant, cash flows, the capital budgeting analysis that can be conducted is very simple and straightiorward. Unfortunately, this type of project rarely exists. When a project's cash flows, or the conditions that affect their magnitude or timing, vary from their expected values, then the analysis becomes more complicated, Projects that have the potential to exhibit greater or lesser levels of risk than the firm's average, or normal, level means that adjustments should be made to the capital budgeting analysis process. Several rechniques are used to assess the stand-alone risk, which reflects the uncertainty about the project's cash flows. Sorne of these techiniques are: (1) sensitivity analysis, (2) scenario analysis, and (3) Monte Carlo simulation. When a firm is performing a sensitivity analysis on a project, an increase in variable costs or foxed costs will oenerally cause the project's net present value (NPV) to allows more than one variable at a time to be chanped, and it takes into account the probabilities of changes in the key variables. 5. Measuring stand-alone risk When projects involve certain, or constant, cash flows, the capital budgeting analysis that can be conducted is very sim Unfortunately, this type of project rarely exists. When a project's cash flows, or the conditions that affect their magnitude or timing, vary from their expected values, th complicated. Projects that have the potential to exhibit greater or lesser levels of risk than the firm's average, or norma adjustments should be made to the capital budgeting analysis process. Several techniques are used to assess the stand-alone risk, which reflects the uncertainty about the project's cash flows are: (1) sensitivity analysis, (2) scenario analysis, and (3) Monte Carlo simulation. When a firm is performing a sensitivity analysis on a project, an increase in variable costs or fixed costs will generally ca value (NPV) to allows more than one variable at a time to be changed, and it takes into account the probat variables. 5. Measuring stand-alone risk When projects involve certain, or constant, cash flows, the capital budgeting analysis that can be conducted is ve Unfortunately, this type of project rarely exists. When a project's cash flows, or the conditions that affect their magnitude or timing, vary from their expected val complicated. Projects that have the potential to exhibit greater or lesser levels of risk than the firm's average, or adjustments should be made to the capital budgeting analysis process. Several techniques are used to assess the stand-alone risk, which reflects the uncertainty about the project's cast are: (1) sensitivity analysis, (2) scenario analysis, and (3) Monte Carlo simulation. ling a sensitivity analysis on a project, an increase in variable costs or fixed costs will gener allows more than one variable at a time to be changed, and it takes into account the variables. S. Measuring stand-alone risk When projects involve certain, or constant, cash flows, the capital budgeting analysis that can be conducted is very simple and straightforward. Unfortunately, this type of project rately exists. When a project's cash flows, or the conditions that affect their magnitude or timing, vary from their expected values, then the analysis becomes mere complicated. Projects that have the potential to exhibit greater or lesser levels of risk than the firm's average, or normal, level means that adjustments should be made to the capital budgeting analysis process. Several techniques are used to assess the stand-alone risk, which reflects the uncertainty about the pfoject's cash flows. Some of these techniques are: (1) sensitivity analysis, (2) scenario analysis, and (3) Monte Carlo simulation. When a firm is performing a sensitivity analysis on a project, an increase in variable costs or fixed costs will gererally cause the project's net present value (tap) to allows more than one variable at a time to be changed, and it takes into account the probabilities of changes in the key variables. When a firm is performing a sensitivity analysis on a project, an increase in variable costs or fixed costs will generally cause the project's net present value (NPV) to allows more than one variable at a time to be changed, and it takes into account the probabities of changes in the key variables. When a project's cash flows, or the conditions that affect their magnitude or timing, vary from their expected values, then the analysis becomes mo complicated. Projects that have the potential to exhibit greater or lesser levels of risk than the firm's average, or normal, level means that adjustments should be made to the capital budgeting analysis process. Several techniques are used to assess the stand-alone risk, which reflects the uncertainty about the project's cash flows. Some of these techniques are: (1) sensitivity analysis, (2) scenario analysis, and (3) Monte Carlo simulation. ng a sensitivity analysis on a project, an increase in variable costs or fixed costs will generally cause the project's net present variables. allows more than one variable at a time to be changed, and it takes into account the probabelities of changes in the key