Question: 1. What is sensitivity analysis? 2. Perform a sensitivity analysis on the unit sales, salvage value, and WACC for the project. Assume that each of
1. What is sensitivity analysis? 2. Perform a sensitivity analysis on the unit sales, salvage value, and WACC for the project. Assume that each of these variables deviates from its base-case, or expected value by plus or minus 10\%, 20\%, and 30%. Calculate NPV for each case (21 NPV in total: 7 NPV for change in unit sale; 7 NPV for change in salvage value; and 7 NPV for change in WACC), then draw a graph with three lines (one for Unit Sales, one for Salvage Value, and one for WACC, all three lines in the same graph), At the end, perform a sensitivity analysis for the project (what you have seen from your graph, what conclusion you can make?). 3. What is the primary weakness of sensitivity analysis? What are its primary advantages
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