Use a Sensitivity Analysis to Adjust Cash Flows in NPV

Refer to the data provided below for Proposal A and also provided in an Excel file in this link to

answer the following questions.

a$.$ Prepare a table in Excel to compute the net present value for Proposal A and consider this the

likely scenario. Next, prepare an optimistic and pessimistic scenario. For the optimistic scenario,

increase each cash inflow by $10\%$ and for the pessimistic scenario, decrease each net cash inflow

by $10\%.$Use a Sensitivity Analysis to Adjust Cash Flows in NPV

Refer to the data provided below for Proposal A and also provided in an Excel file in this link to answer the following questions.

Proposal A

Initial investment

$$100,000$

$60,000$

Cash flow from operations

Year $1$

Year $2$

$40,000$

Year $3$

$35,000$

Disinvestment

Life $($years$)$

$3$

Discount rate $($for all proposals$)$

$12\%$

a$.$ Prepare a table in Excel to compute the net present value for Proposal A and consider this the likely scenario. Next, prepare an optimistic and pessimistic scenario. For the optimistic scenario, increase each cash inflow by $10\%$ and for the pessimistic scenario, decrease each net cash inflow by $10\%.$