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Explain how sensitivity and scenario analysis can be used as part of capital budgeting investment analysis.

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Finance

Explain how sensitivity and scenario analysis can be used aspart of capital budgeting investment analysis.

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Please build upon the pointers below to develop your answer Life is a tissue of contraries Its full of risks In fact it offers more risks than rewards Same is true with investment decisions There are various risks associated with capital budgeting such as Variation in future cash flows Cost of capital used for discounting can change over the project life Estimated project life can be longer or shorter    See Answer
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Explain how sensitivity and scenario analysis can be used aspart of capital budgeting investment analysis.

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