Project Risk Evaluation Methods - Sensitivity Analysis

Mirela Iloiu and Diana Csiminga
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Mirela Iloiu: University of Petroşani, Romania
Diana Csiminga: University of Petroşani, Romania

Annals of the University of Petrosani, Economics, 2009, vol. 9, issue 2, 33-38

Abstract: The viability of investment projects is based on IRR and NPV criteria. In the economic analysis of the projects there are some aspects of project feasibility which may require sensitivity and risk analysis. Sensitivity analysis estimates the effect on achieving project objectives if certain assumptions materialize or not. This paper presents the purpose of sensitivity analysis and the steps that must be followed in order to perform a sensitivity analysis as well as a numeric example.

Keywords: investment project; NPV; IRR; sensitivity analysis; base-case; key variables; sensitivity indicator; switching value (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:pet:annals:v:9:i:2:y:2009:p:33-38

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