cenario Sensitivity Simu Analysis Analysis Analysis Requires changes in one assumption at O a time to observe the impact on NPV Estimates the NPV ater a givenod O of time, assuming specific changes in the values of multiple key factors that could affecta project's NPV Uses an algorithmic methad to pick values randomly from probability distributions to calculate a project's NPV Consider the following case: Coppinger Corp. is evaluating a new project. Coppinger used the expected values of unit sales, price per unit, and variable cost per unit to calculate an expected NPV of $13,500. Coppinger has developed a few different possible cases of what demand and costs might look like for the new project, which are summarized in this table: Price per Variable Cost Unit Sales Unit Base case 120,000 $6.00 Worst case 70,000 $5.50 Best case 50,000 $.5D per Unit $4.25 $5.25-$22,600 $3.80 $13,500 $31,200 What kind of risk analysis is Coppinger using? O Soenario analysis O Sensitivity analysis O Simulation analysis Suppose Coppinger Corp. is evaluating a new capital budgeting project and conducting some basic risk analysis. First, it calculates the project's NPV at various levels for the project's key input variables. Coppinger next calculates the project's NPV at various prices per unit, plots the results on the accompanying graph, and then repeats this process separately for variable cost per unit and required return. This process is a results are shown on the graph. whose NPV (Millons of $ 200 Price per 120 Variable Cost -200 12 12 DEVIATION 1%) According to this analysis, which variable is the key value driver for the project? Atthe current input-value estimates, does this projec have a positive or negative NPV? O Price per unit O Required return O Negative NPV O Positive NPV Variable cost per unit Decision trees are a visual representation of the sequential choices that financial decision makers face when making capital budgeting and investment decisions. True or False: The beginning of the project is less risky than later stages. True