Question: (5) A 'sensitivity' analysis. The estimated figures on the proposed project. fer example the yearly revenues that the project will generate in the future. are

 (5) A 'sensitivity' analysis. The estimated figures on the proposed project.

(5) A 'sensitivity' analysis. The estimated figures on the proposed project. fer example the yearly revenues that the project will generate in the future. are of course just estimations - not certainties. if the company decides to go ahead with the project, these values may turn out to be different than expected. The revenues may be higher or lower than projected for example. or the cost of capital of the company could be higher or lower in the future than it currently is. In a 'sensitivity analysis' we investigate what the effect is on the NPv and IRR if we change one of the projected values in our calculations. Firstly, present a NPv profile. which illustrates the NPV of the project at various values fer the cost of capital. Secondly, recompute what the uev and the IRR of the project would be if the revenues of the project turn out to be 25% lower than projected. The company encourages your team to provide additional \"sensitivity analyses of this sort

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