“Sensitivity analysis involves evaluating aspects that are important (sensitive) to the outcome of the project due to their impact on the magnitude or value of the project cash flows and/or their risk
Want you to think about what key elements or parameters will the project
NPV be sensitive to, and then conduct some sensitivity analysis of
project NPV outcomes around these
No real correct answer around what factors you focus on and what you
think is an appropriate sensitivity change
Ideally you want to try and examine comparable changes to draw
sensible conclusions about the relative sensitivity of different parameters
May also think about doing some scenario analysis, such as:
Best or worst operating and market conditions
Efficient or inefficient operation outcomes
Potential Government policy settings
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