Sensitivity Analysis

Consider the same project as Project NPV - Working Capital. Assume that the product life-cycle of seven years is viewed as a safe bet, but that the scale of demand for the product is highly uncertain. Analyze the sensitivity of the project NPV to the units sales scale factor and to the cost of capital. Solution Strategy. Copy the pattern of unit sales in the base case to a new location and multiply this pattern by a scale factor to get the new unit sales scenario. Assume that the real...