Multiple choice

Sensitivity analysis is performed to

  1. ascertain risk

  2. determine profitability

  3. build scenario for risk profile

  4. none of the above
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A Correct answer
Explanation

Sensitivity analysis examines how changes in key variables affect project outcomes, thereby quantifying the risk associated with uncertainty. By varying one input at a time, managers can identify which factors most significantly impact viability, allowing them to focus risk management efforts on the most critical uncertainties.

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