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Answer (C) is correct . After a problem has been formulated into any mathematical model, it may be subjected to sensitivity analysis, which is a trial-and-error method used to determine the sensitivity of the estimates used. For example, forecasts of many calculated NPVs under various assumptions may be compared to determine how sensitive the NPV is to changing conditions. Changing the assumptions about a certain variable or group of variables may drastically alter the NPV, suggesting that the risk of the investment may be excessive.

Answer (A) is incorrect because Sensitivity analysis is useful when cash flows or other assumptions are uncertain.
Answer (B) is incorrect because Sensitivity analysis can be used with any of the capital budgeting methods.
Answer (D) is incorrect because Sensitivity analysis is not a ranking technique; it calculates results under varying assumptions.