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In order to determine the criticality of the assumptions, they need to be quantified; it is then possible to put the financial results in a [[spreadsheet]] and link them together. These financial impacts will change for the various assumptions.
CAP measures the criticality of an assumption as a change in the [[net present value]] of a venture (NPV). To determine criticality each assumption is assigned a range of uncertainty: base case, best and worst case. Then, assumption for assumption, while keeping the other assumptions at [[ceteris paribus|base case]], the NPV changes for each assumption in the worst- and best
The NPV analysis proves the company with information about the criticality of an assumption. Two signals strongly indicate a critical assumption: a big difference in NPV between the best and worst-case scenarios, or a huge loss of NPV in the worst-case scenario
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