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Different techniques for analyzing project risk require different input variables and assumptions. The procedure in which one of the elements (or variables) affecting a project's
Different techniques for analyzing project risk require different input variables and assumptions. The procedure in which one of the elements (or variables) affecting a project's expected value is changed to study its effect on the expected value is called analysis Martina is a risk analyst. She is conducting a sensitivity analysis to evaluate the riskiness of a new project that her company is considering investing in. Her risk analysis report includes the sensitivity curve shown on the graph. NPV lMilins of dollarg Base Case NPV Base Case Price 30 -24 -18 -12 -6 0 6 12 18 24 30 CHANGES IN SELLING PRICE (Percent This curve implies that the project is very sensitive to changes in the price of the product. The project's NPV is likely to become negative if the price for which the product can be sold decreases by 12%
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