# Question

Sensitivity analysis involves changing one variable at a time in a capital budgeting situation and seeing how NPV changes. Perform sensitivity analysis on the each of the following variables from problem 17 to determine its effect on NPV.

a) Sales can be 10-percent higher or lower than expected each year.

b) Expenses may be 10-percent higher or lower than expected each year.

c) Your initial investment in fixed assets and working capital may be 50% higher than originally estimated.

a) Sales can be 10-percent higher or lower than expected each year.

b) Expenses may be 10-percent higher or lower than expected each year.

c) Your initial investment in fixed assets and working capital may be 50% higher than originally estimated.

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