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A sensitivity analysis, otherwise known as a "what-if" analysis allows decision makers to see what the desired result of the financial model would be under different circumstances. It allows the user to select two variables, or assumptions, in the model and see how a desired output would change based on the new assumptions. Consider Question 1 above, do sensitivity analysis with respect to the prior probabilities of favourable and unfavourable market demand (without changing the prior probability of average market). Determine the points where the decision shifts from one alternative to another. Use algebra to solve for the crossover point(s). What is the decision if the prior probability of favourable market shifted to 0.5 to 0.62 [20 marks) A sensitivity analysis, otherwise known as a "what-if" analysis allows decision makers to see what the desired result of the financial model would be under different circumstances. It allows the user to select two variables, or assumptions, in the model and see how a desired output would change based on the new assumptions. Consider Question 1 above, do sensitivity analysis with respect to the prior probabilities of favourable and unfavourable market demand (without changing the prior probability of average market). Determine the points where the decision shifts from one alternative to another. Use algebra to solve for the crossover point(s). What is the decision if the prior probability of favourable market shifted to 0.5 to 0.62 [20 marks)

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