Question: Solve in Excel. Show data and inputs in Excel. b. Now conduct a sensitivity analysis to determine the sensitivity of NPV to changes in the
Solve in Excel. Show data and inputs in Excel.
| 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. Include a graph in your analysis. | ||||||||
| % Deviation | 1st YEAR UNIT SALES | 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 1st Year Unit Sales in Cell B100 should be the number 1,000 and NOT have the formula =D31 in that cell. This is because you'll use D31 as the column input cell in the data table and if Excel tries to iteratively replace Cell D31 with the formula =D31 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 | 1,000 | $1,000 | ||||||
| -20% | ||||||||
| -10% | ||||||||
| 0% | ||||||||
| 10% | ||||||||
| 20% | ||||||||
| % Deviation | SALES PRICE | % Deviation | VARIABLE COST | |||||
| from | Base | NPV | from | Base | NPV | |||
| Base Case | $24.00 | Base Case | $18.00 | |||||
| -20% | -20% | |||||||
| -10% | -10% | |||||||
| 0% | 0% | |||||||
| 10% | 10% | |||||||
| 20% | 20% | |||||||
| Deviation | NPV at Different Deviations from Base | |||||||
| from | Sales | Variable | ||||||
| Base Case | Units Sold | Price | Cost/Unit | |||||
| -20% | $0 | $0 | $0 | |||||
| -10% | $0 | $0 | $0 | |||||
| 0% | $0 | $0 | $0 | |||||
| 10% | $0 | $0 | $0 | |||||
| 20% | $0 | $0 | $0 | |||||
| Range |
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