There are 3 types of Project Analysis: Break-Even Analysis, Sensitivity Analysis, Scenario Analysis. Briefly describe two types of project analysis to evaluate the sensitivity of the NPV estimates to measurement error.
Break-Even Analysis 和 Sensitivity Analysis are two methods often employed to assess the sensitivity of Net Present Value (NPV) estimates to measurement error.
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Break-Even Analysis: This approach calculates the point where total project costs equal total revenues, providing insights into the minimum level of output or sales volume needed to cover all expenses, including any fixed and variable costs. When estimating the NPV, errors in projecting future cash flows or costs can significantly affect the break-even point, highlighting the sensitivity of the NPV to these errors.
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Sensitivity Analysis: This technique involves varying one or more input variables, such as cash flows, discount rates, or project lif
