Sensitivity analysis helps determine the: degree to which a firm is reliant upon multiple economic factors changing simultaneously. ideal level of variable costs in relation to the fixed costs of a project. range of possible outcomes given possible ranges for each variable. net present value given the best and the worst possible situations. degree to which the net present value reacts to changes in a single variable.

In a fixed-term, level-payment reverse mortgage, sometimes called a reverse annuity mortgage, or ram, a lender agrees to pay the homeowner a monthly payment, or annuity, and expects to be repaid from the homeowner’s equity when he or she sells the home or obtains other financing to pay off the ram. consider a household that owns a $150,000 home free and clear of mortgage debt. the ram lender agrees to a $100,000 ram for 10 years at 6 percent. assume payments are made annually, at the beginning of each year to the homeowner. calculate the annual payment on the ram.