Spreadsheet Prob Template b. 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 25% above and below their base case values. Include a graph in your analysis. Evaluating Risk: Sensitivity Analysis 1. Sensitivity of NPV to Changes in Inputs. Here we use an Excel "Data Table" to find NPV for different unit sales, variable costs, WACC, and sales prices, holding other thing constant. WACC % Deviation from Base Case -25% -10% 1st YEAR UNIT SALES Units NPV Sold NPV WACC % Deviation from Base Case -25% -10% 0% 10% 25% 10% 25% SO % Deviation VARIABLE COSTS Variable Costs SALES PRICE Sales from Base Case NPV Price sol % Deviation from Base Case -25% -10% 0% 106 25% SO -10% 10% Deviation from Base Case NON-VARIABLE COSTS Fixed Costs -10% 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 number of units sold in cell B100 should be the number 1000; you should NOT have the formula-D29 in that cell. This is because you'll use D29 as the column input cell in the data table and in Excel tries to iteratively replace cell 029 with the formula -D29 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! 10 . 254 Sensitivity Analysis $12,000.00 $10,100.00 $8,200.00 $6,300.00 $4,400.00 $2,500.00 $600.00 ($1,300.00) ($3,200.00) (55,100.00) (57,000.00) -20% - Sales price - VC - Units Non-var, cost - WACC Sales Price Deviation from Base Case . NPV at Different Deviations from Base V ariable Non-variable Cost Units Sold WACC Note: Copy the results from the sensitivity analysis into this table. S -00. S -00. S 00. e. Would you recommend that the project be accepted? Explain