Several types of analyses are available for evaluating a projects risk. In the following table, correctly identify the analysis being described.

	Scenario Analysis	Sensitivity Analysis	Simulation Analysis
Measures the change in NPV that occurs when only one variable is changed
Uses computers to consider a large number of possibilities for a project
Examines the effect of simultaneous changes in multiple drivers of a projects NPV

Consider the following case:

Coppinger Corp. is considering the use of a computer to assign probability distributions to the input variables used in the analysis. The computer would then randomly select input variables from their distributions and calculate NPVs based on those selections. What kind of analysis is this?

Scenario analysis

Sensitivity analysis

Simulation analysis

Suppose Coppinger Corp. is evaluating a new capital budgeting project and conducting some basic risk analysis. First, it calculates the projects NPV at various levels for the projects key input variables. Coppinger next calculates the projects NPV at various prices per unit, plots the results on the accompanying graph, and then repeats this process separately for variable cost per unit and required return. This process is a , whose results are shown on the graph.

According to this analysis, which variable is the key value driver for the project?

Required return

Price per unit

Variable cost per unit

At the current input-value estimates, does this project have a positive or negative NPV?

Positive NPV

Negative NPV

Decision trees are a visual representation of the sequential choices that financial decision makers face when making capital budgeting and investment decisions. True or False: Typically the beginning of the project is riskier than later stages.