Chapter 11 - 1 BA 3341 Business Finance Nataliya...

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Unformatted text preview: 1 BA 3341 Business Finance Nataliya Polkovnichenko, Senior Lecturer 2 • Sensitivity/ Scenario Analysis • Break-Even analysis – Accounting vs. Economic Break-Even • Variable vs. Fixed Costs, Operating Leverage 2 • Sensitivity/ Scenario Analysis • Break-Even analysis – Accounting vs. Economic Break-Even • Variable vs. Fixed Costs, Operating Leverage 3 The analysis of the effects on project NPV of changes in sales, costs and other variables. (one variable at a time) 4 [email protected]%= $478 Target 5 Which variables are the most (least) significant? 6 • Advantages: – Looks at one variable at a time and helps identify the most important variables . • Disadvantages: – Optimism and pessimism – Interrelation of variables 7 • Scenario analysis allows you to look at different but consistent combinations of variables. • Simulation analysis is an extension of scenario analysis....
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This note was uploaded on 11/24/2009 for the course BA 3341 taught by Professor Polkovnichenko during the Fall '08 term at University of Texas at Dallas, Richardson.

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Chapter 11 - 1 BA 3341 Business Finance Nataliya...

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