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4 A company is using sensitivity analysis to analyse the risk of a two year investment opportunity. The following cash flow model is available: Year
4 A company is using sensitivity analysis to analyse the risk of a two year investment opportunity. The following cash flow model is available: Year Capital expenditure Revenue Costs Net cash flow 0 (30,000) (30,000) 1 60,000 37,200 22,800 2 60,000 37,200 22,800 The relevant discount rate used is 16% and the net present value of the project has been calculated as 6,599. Is this project sensitive to changes in revenue? Group of answer choices 1. The project is sensitive at both the 5% level and the 10% level. 2. The project is not sensitive to changes in revenue. 3. The project is sensitive at the 10% level, but not at the 5% level. 4. The project is sensitive at the 5% level, but not at the 10% level
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