ExpertEasy2 marksMultiple Choice
ACCA · Question 25 · Decision-making techniques
Section B - Case 2: CyberShield
CyberShield is a tech startup developing a new B2B SaaS (Software as a Service) platform for cybersecurity.
The founders are worried about the accuracy of their estimates. They decide to calculate how much the estimated sales volume can fall before the project breaks even (NPV = 0).
What technique are they using?
Section B - Case 2: CyberShield
CyberShield is a tech startup developing a new B2B SaaS (Software as a Service) platform for cybersecurity.
The founders are worried about the accuracy of their estimates. They decide to calculate how much the estimated sales volume can fall before the project breaks even (NPV = 0).
What technique are they using?
Answer options:
A.
Expected value analysis
B.
Simulation
C.
Sensitivity analysis
D.
Maximin analysis
How to approach this question
Identify the technique that tests the impact of changing one variable at a time to see its effect on the final outcome.
Full Answer
C.Sensitivity analysis✓ Correct
Sensitivity analysis involves changing one variable at a time (e.g., sales volume, selling price, cost) to see how much it can change before the project becomes unviable (e.g., NPV falls to zero or profit becomes a loss). It helps identify the most critical variables in a project.
Common mistakes
Confusing sensitivity analysis with simulation (which changes multiple variables simultaneously).
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