For a sensitivity analysis, we allow only one component to change at the time by

Question

For a sensitivity analysis, we allow only one component to change at the time by keeping all other variations to zero, So that is the reason why above lines are almost linear.

In the given figure each line shows the variability of each parameter(gold grade, gold price, capital cost, operative cost) with NPV.

As observed, the gold price has a positive slope, i.e change in variability is high in increasing manner, with an increase in NPV. So it is highly sensitive to change in NPW

At the same time, the operative cost is having a negative slope, change in variability is very high in decreasing manner with an increase in NPW, so it is highly sensitive to change in NPW.

Operative cost & gold price are high;y sensitive in this case.

It is least sensitive to capital cost, as the slope is almost zero i.e. Although there is a humongous change in variability the NPW change is very less.

If you further have any doubts, kindly leave a comment. I will try to respond as soon as possible.

Regards
satish

Explanation / Answer

2. In the graph below, which variable is the NPW most sensitive to? Sensitivity Analysis 120 110 100 +-.. 90 8 80 E 70 Operative cost -Capitalcost 1-Gold price -Gold grade 60 2 50 40 30 20 + 255075 100 125 150 175 Change in variable, % ha se cat? (How long should you

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