Question: Below is a project cash flow forecasting worksheet that you will use to perform some sensitivity and scenario analysis. We did NOT formally do these
| Below is a project cash flow forecasting worksheet that you will use to perform some sensitivity and scenario analysis. | ||||||
| We did NOT formally do these things in class, although we discussed them conceptually on multiple occasions. | ||||||
| Read the questions carefully and follow your intuition. | ||||||
| Is this a value-adding project under the base case assumptions? Why or why not? | ||||||
| If "Sales price per unit, Year 1" is changed to $1.65, what is the percent change in the unit price relative to | ||||||
| the initial value ($1.50) in the base case? | ||||||
| What happens to the project's NPV when the "Sales price per unit, Year 1" is changed to $1.65? | ||||||
| What is the percentage change in NPV with the new price relative to the base case? | ||||||
| What is the percentage change in NPV for a 1% change in the "Sales price per unit, Year 1"? |
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