Best Case and Worst Case Scenario

Explanation

The answer prompted in this question is "Scenario Analysis." Scenario Analysis is a method of measuring a project's stand-alone risk. This method is considered as superior to Sensitivity Analysis, and this is primarily because Scenario Analysis considers a range of possible values for the input values whereas Sensitivity

Analysis considers only the sensitivity of the project's NPV to fluctuations in the underlying input variable(s). In Scenario Analysis, the financial analyst establishes a "worst case" and "best case" situation, in addition to the "base case." The base case scenario sets all the input variables at their most likely values. Often, the values used for the base case scenario are the current values for input variables or their expected values into the near future. In Scenario Analysis, the best and worst case scenarios are compared to the base case, and the sensitivity of the project's NPV is examined. "Tributary Leads Analysis," along with "Miller and Thorn

Simulation," are completely fictitious answers.