ECO 1192 Lecture Notes - Lecture 6: Airborne Early Warning And Control, Mansfield, Sensitivity Analysis
7 Nov 2017
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Leads to the same conclusion as npw, nfw, aew, irr, err methods. If b/c =1 the project is the same as investing available funds at marr. Rank projects from smaller first cost to largest. Ensure at least one project has a valid b/c ratio. Perform an incremental b/c ratio analysis between two smallest projects. List the set of possible projects to be considered. Identify the inputs and outputs of each alternative. Assign a monetary value to each input and output. Sum all revenues and costs to estimate the total profitability of each alternative. State point of view from which costs and benefits will be assessed. Analyse incremental effects and gather data about costs and benefits. Express the cost and benefit data in nominal dollars or constant dollars. Run the deterministic model (using single-value costs and benefits) Conduct a sensitivity analysis to determine which variables appear to have the most influence on npv.
