Question: b. Now conduct a sensitivity analysis to determine the sensitivity of NPV to changes in the sales price, variable costs per unit, and number of
| b. Now conduct a sensitivity analysis to determine the sensitivity of NPV to changes in the sales price, variable costs per unit, and number of units sold. Set these variables values at 10% and 20% above and below their base-case values. | ||||||||
| % Deviation | SALES PRICE | Note about data tables. The data in the column input should NOT be input using a cell reference to the column input cell. For example, the base case Sales Price in Cell B89 should be the number $24.00 you should NOT have the formula in that cell. This is because you'll use D22 as the column input cell in the data table and if Excel tries to iteratively replace Cell D22 with the formula =D22 rather than a series of numbers, Excel will calculate the wrong answer. Unfortunately, Excel won't tell you that there is a problem, so you'll just get the wrong values for the data table! | ||||||
| from | Base | NPV | ||||||
| Base Case | $24.00 | $3,463,337 | ||||||
| -20% | $19.20 | $26,770,033 | ||||||
| -10% | $21.60 | $15,218,051 | ||||||
| 0% | $24.00 | $3,463,337 | ||||||
| 10% | $26.40 | $3,463,337 | ||||||
| 20% | $28.80 | $284,703 | ||||||
| % Deviation | VARIABLE COST | % Deviation | 1st YEAR UNIT SALES | |||||
| from | Base | NPV | from | Base | NPV | |||
| Base Case | $17.50 | Base Case | 1,000 | |||||
| -20% | $14.00 | -20% | 800 | |||||
| -10% | $15.75 | -10% | 900 | |||||
| 0% | $17.50 | 0% | 1,000 | |||||
| 10% | $19.25 | 10% | 1,100 | |||||
| 20% | $21.00 | 20% | 1,200 | |||||
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