Question: Consider the NPV sensitivity analysis reported in the following table (the numbers in the body of the table are dollars). Deviation Cover sales Price Operating
Consider the NPV sensitivity analysis reported in the following table (the numbers in the body of the table are dollars).
| Deviation | Cover sales | Price | Operating cost | Discount rate |
| +20% | -108,680 | -70,765 | -180,678 | -150,987 |
| +10% | -122,783 | -98,498 | -160,094 | -145,876 |
| Base case | -150,929 | -150,929 | -150,929 | -150,929 |
| -10% | -164,890 | -189,756 | -125,098 | -138,743 |
| -20% | -189,428 | -200,690 | -115,867 | -133,987 |
| Range | 80,748 | 129,925 | 64,811 | 17,000 |
A) Which variable is the most risky for the project? Explain why.
B) Which variable is the least risky for the project? Explain why.
C) If you were told that the probability of any deviation in the risky event you identified in a) was 0.001%, how would that affect the answer you gave in a)?
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