Suppose the base case NPV of the project is $1,143,650.00 and the NPV is $1,362,406.00 when the sales volume is increased by 5,000 units. The sensitivity of the base case NPV to changes in the sales figure is ____. If there were a decrease of 500-unit in projected sales, by how much would the NPV of the project change?

Answer rating: 100% (QA)

We can perform a sensitivity analysis to assess the impact of changes in sales volume on the projects NPV Heres how 1 Calculate the change in NPV and sales volume Change in NPV NPV 136240600 114365000 21875600 Change in sales volume Sales 5000 units 2 Calculate the sensitivity of NPV to changes in sales Sensitivity NPV Sales 21875600 5000 units 4375 per unit 3 Estimate the change in NPV for a 500unit decrease in sales Decrease in sales 500 units negative sign indicates a decrease Change in NPV due to decrease in sales Sensitivity Decrease in sales 4375unit 500 units 2187500 Therefore The sensitivity of the base case NPV to changes in the sales figure is 4375 per unit If there were a decrease of 500 units in projected sales the NPV of the project ... View the full answer