Question: business is considering a project which will cost them initially OMR 20,000. The sales expected for the two-year duration is OMR 20,000 per year. The

business is considering a project which will cost them initially OMR 20,000. The sales expected for the two-year duration is OMR 20,000 per year. The variable costs are OMR 2,000 per year. Cost of capital is 10%.

1. Calculate the sensitivity of the project NPV to change in initial investment?

2. Calculate the sensitivity of the project NPV to change in expected sales?

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