Moderate

Sensitivity analysis means:

Correct answer: C. Both (a) & (b)

  • A. While evaluating a certain project we have used a certain cost certain yield estimate and certain price increase estimates
  • B. In all cases our assumption may not prove true
  • C. Both (a) & (b)
  • D. None of these

Explanation

Sensitivity analysis tests how a project's result changes when uncertain assumptions such as cost, yield, or price differ from the estimates used. Since assumptions may not prove true, both statements describe the need for sensitivity analysis.

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