Question: Question 4 (20 marks) Kenny Co. is considering a project which has a useful life of two years. The project requires an initial investment of
Question 4 (20 marks) Kenny Co. is considering a project which has a useful life of two years. The project requires an initial investment of N$7 000 000. The cash inflow from the sale of the product is N$6 500 000 in each of the two years with a selling price of $10 per unit. Total variable costs are estimated at N$2 000 000 for each year. The cost of capital is 8%. Required: a) Measure the sensitivity of the project NPV to change in the following variables: initial (15 investment, sales volume, selling price, variable cost per unit, and cost of capital. marks)
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