Sensitivity Analysis
Test how far key variables can move before an investment stops working.
Introduction
Who this is for: Investors stress-testing an appraisal before committing.
Why it matters: The base case is the least interesting scenario, because it is the one that never happens. What matters is how much room there is before the deal breaks — and which single variable breaks it first.
Typical scenario: An investor checking how far values, rent or rates can move before an acquisition becomes loss-making.
- Testing one variable at a time when a downturn moves several together.
- Stress-testing by a fixed percentage rather than by a plausible market move.
- Treating the base case as the expected outcome rather than one point in a range.
Inputs
Base Case
Stress Ranges
Analysis
Base cash flow is £27,400. Income can fall 48.9% or rates rise 5.27 points before it reaches zero, and values can fall 13.3% before breaching the LTV covenant. Under combined stress, cash flow is £8,600.
This analysis provides context, not financial advice. Consult a qualified adviser before making investment decisions.
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Sensitivity
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Live Results
Base Net Cash Flow
£27,400
Combined Stress Cash Flow
£8,600
Income Fall to Break-Even
48.93%
Rate Rise to Break-Even
5.27%