3.2 Building a 2-Sided Sensitivity Table

Creating and Analyzing Sensitivity Tables

• The video tutorial demonstrates creating and formatting a sensitivity table in Excel.
• The instructor starts by adjusting decimal places and formatting the table for clear presentation.
• The sensitivity table is used to test the sensitivity of the levered internal rate of return (IRR) by changing assumptions.
• The tutorial emphasizes the importance of checking the sensitivity table for accuracy.
• The instructor demonstrates changing assumptions for loan-to-value (LTV) and interest rate, and observing the corresponding IRR changes.
• The tutorial showcases the live updating nature of the sensitivity table as assumptions are altered.
• It is highlighted that the sensitivity table can be used for one-sided and two-sided analysis.
• The video mentions another type of sensitivity table comparing rental growth rates versus exit cap rates.
• The tutorial concludes with a discussion of common mistakes made when building sensitivity tables.
• The instructor emphasizes the usefulness of sensitivity tables for financial analysis.
• The tutorial provides practical examples and a step-by-step guide for creating and utilizing sensitivity tables.
• The video tutorial offers insights into the potential challenges and considerations when working with sensitivity tables in Excel.

Test your knowledge of sensitivity tables in financial analysis with this quiz. Explore the creation, formatting, and utilization of sensitivity tables in Excel, and learn about their importance in testing assumptions and evaluating financial scenarios.