A Risk-Sensitivity Analysis on NPV Model of Investment Projects

NPV (Net Present Value) is a preferred method of feasibility study to describe uncertainty of risk-sensitivity. Sensitivity analysis is an important and indispensable process. In addition to single factor sensitivity analysis, Risk-sensitivity analysis takes into account of probability distribution, control and relativity of risk factors, making the traditional sensitivity analysis more uniform and more objective. This paper briefly describes NPV, sensitivity analysis method, and discusses concepts about risk factors distribution factor, and controllability factors. It also demonstrates operability of an integrated sensitivity analysis through the establishment of NPV model and case analysis.