ASC Sensitivity and Scenario Analysis Flashcards

In ARGUS, a sensitivity analysis is primarily used to:

Answer: Measure how changes in key assumptions affect investment returns

Sensitivity analysis tests how variations in inputs like cap rate, rent growth, or vacancy affect output metrics such as IRR and NPV.

Which output metric is most commonly tested in an ARGUS sensitivity analysis?

Answer: IRR or NPV

IRR and NPV are the primary return metrics analyzed in sensitivity tables to understand investment risk across a range of assumptions.

In ARGUS, a scenario differs from a simple sensitivity analysis in that:

Answer: Scenarios allow multiple assumptions to change simultaneously under named conditions

Unlike single-variable sensitivity analysis, scenarios bundle multiple assumption changes into named cases (e.g., downside, upside) run simultaneously.

What is a base case in ARGUS scenario modeling?

Answer: The most likely expected outcome used as the benchmark

The base case represents the most probable set of assumptions and serves as the reference point for comparing upside and downside scenarios.

In ARGUS sensitivity analysis, varying the exit cap rate primarily affects:

Answer: The reversion (sale) value of the property

The exit cap rate is applied to the terminal NOI to determine the property's sale price, making it a critical driver of reversion value.

Which ARGUS feature allows you to display multiple scenario results side by side for comparison?

Answer: Scenario manager and comparison view

ARGUS's scenario manager lets analysts run and compare multiple named scenarios (base, upside, downside) simultaneously in a single comparative view.