Resources · Finance and analytics
Test how changes in an important assumption affect an outcome, then explain what that uncertainty means for the decision.
Name the outcome you are testing and the assumption that could materially change it. Typical inputs include sales volume, price, cost and discount rate.
Record the base input and result. Change one input at a time first, using a clearly stated range, so the comparison remains interpretable.
For example, if a 10% fall in sales volume changes NPV from $1,000,000 to $850,000, NPV fell by 15%. The sensitivity index is 1.5.
Explain which assumptions drive the decision, how large the effect is, and what should be checked before acting. A sensitivity result describes a scenario; it does not tell you how likely that scenario is.
One-way analysis can miss interactions between inputs. It also does not establish probability or causation. Use scenario or probabilistic analysis when those questions matter.
Show the base case, changed assumption, resulting value, units and a bounded implication. Keep the claim inside the evidence and connect it to the assignment question.