Below is a project cash flow forecasting worksheet that you will use to perform some sensitivity and scenario analysis.
We did NOT formally do these things in class, although we discussed them conceptually on multiple occasions.
Read the questions carefully and follow your intuition.
Is this a value-adding project under the base case assumptions? Why or why not?
If "Sales price per unit, Year 1" is changed to $1.65, what is the percent change in the unit price relative to
the initial value ($1.50) in the base case?
What happens to the project's NPV when the "Sales price per unit, Year 1" is changed to $1.65?
What is the percentage change in NPV with the new price relative to the base case?
What is the percentage change in NPV for a 1% change in the "Sales price per unit, Year 1"?