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Sensitivity analysis is often used in the context of financial modeling or decision-making under uncertainty, among other fields. It assesses the risk or uncertainty of

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Sensitivity analysis is often used in the context of financial modeling or decision-making under uncertainty, among other fields. It assesses the risk or uncertainty of various variables in a model by examining how changes in these variables impact the outcome. Learning Material: Please watch this video Scenario: Launching a New Product A company is considering launching a new product. They have developed a basic profit model that depends on two primary variables: Unit Selling Price and Number of Units Sold. They want to perform a sensitivity analysis to understand how variations in these variables would affect their profit. Data: - Fixed Costs (development, marketing, etc.): $100,000 - Variable Cost per Unit (production, shipping, etc.): $20 - Expected Unit Selling Price: $50 - Expected Number of Units Sold: 3,000 units Assignment Steps: 1. Baseline Profit Calculation: Calculate the expected profit using the given data. 2. Sensitivity Analysis: - For the Unit Selling Price: Vary the selling price by 10%,5%,0% (baseline), +5%, and +10%. - For the Number of Units Sold: Vary the units sold by 10%,5%,0% (baseline), +5%, and +10%. To Complete the Assignment: - Step 1: Use the given data to compute the baseline profit. - Step 2: Adjust the variables (Unit Selling Price and Number of Units Sold) by the specified percentages. - Step 3: Calculate the profit for each combination. - Step 4: Analyze and answer the questions. First Question Please fill in the blank cells of the 'Sensitivity Analysis of Protit' table below. Some entries are already provided as a reference (10 points) Second Question Is profit/loss more sensitive to changes in the unit selling price or to changes in the number of units sold? ( 5 points) In this assignment, have learned how to evaluate the potential variability in outcomes due to changes in critical inputs. This kind of analysis is crucial in decision-making as it helps identify areas of vulnerability or opportunities in a model or business decision

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