Several types of analyses are available for evaluating a project's risk. In the following table, correctly identify the analysis being described. Scenario Analysis Sensitivity Analysis Simulation Analysis Measures the effect on NPV estimates when key factors that affect NPV change in different situations Generates results that are calculated under different scenarios based on formulaic assumptions by representing them in the form of frequency distributions Measures the percentage change in a project's NPV when a given variable is changed and all other NPW.drivers are held at their expected values Consider the following caser Coppinger Corp. is evaluating a new project. Coppinger used the expected values of unit sales, price per unit, and variable cost per unit to calculate an expected NPV of $13,500. Coppinger has developed a few different possible cases of what demand and costs might look like for the new project, which are summarized in this table: NPV Price per Unit $6.00 Variable Cost per Unit $4.25 Base case Unit Sales 120,000 70,000 150,000 Worst case $5.25 $5.50 $6.50 $13,500 - $22,600 $31,200 Best case $3.80 Consider the following case: Coppioger Corp. is evaluating a new project. Coppinger used the expected values of unit sales, price per unit, and variable cost per unit to calculate an expected NPV of $13,500, Coppinger has developed a few different possible cases of what demand and costs might look like for the new project, which are summarized in this table: NPV Base case Worst case Best case Unit Sales 120,000 70,000 150,000 Price per Unit Variable Cost per Unit $6.00 54.25 $5.50 $5.25 56.50 $3.80 $13,500 - $22,600 $31,200 What kind of risk analysis is Coppinger using? 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 project's NPV at various levels for the project's key input variables. Coppinger next calculates the project's 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 sensitivity analysis simulation analy 151 scenario analysis NPVM of si 200 Price per Unit 120 6 Required 40 -120 Variable Cost per Unit -200 -12 4 4 12 20 DEVIATION IN According to this analysis, which variable is the key value driver for the project? Variable cost per unit Price per unit Required return At the current input-value estimates, does this project have a positive or negative NPV? Negative NPV Positive 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: The beginning of the project less risky than later stages