A capital investment project has the following estimated cash flows and present values: Required: Calculate the sensitivity

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A capital investment project has the following estimated cash flows and present values:

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Required:
Calculate the sensitivity of the investment decision to a change in the annual contribution.
(3 marks)
CIMA P1 Performance Operations

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Management And Cost Accounting

ISBN: 9781408093931

9th Edition

Authors: Colin Drury

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Question Posted: Jun 05, 2024 01:02 AM

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A capital investment project has the following estimated cash flows and present values: Required: Calculate the sensitivity

Question:

Year Cash flow Discount factor Present value $ @12% $ 0 Initial investment (200000) 1.0 (200000) 1-5 Contribution per annum 108000 3.605 389 340 1-5 Fixed costs per annum (30000) 3.605 (108150) 5 Residual value 30000 0.567 17010

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Management And Cost Accounting

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