Everyone was affected by the economic impacts of COVID-19 including nonprofits. Donations plummeted and volunteers dried up but the community's need for help only grew. The table below provides information for the Transformation Station, a nonprofit that focuses on people experiencing homelessness for the first time. Transformation Station has determined they need a bigger storage facility. They first need to perform a sensitivity analysis to determine whether to build a larger storage facility. Part 1: Perform a sensitivity analysis (aka net present value) for the three options above. Show work

Part 2: Remember that we have very little control over whether the Conservative, Most Likely, or Optimistic Estimate is realized. In other words, this analysis is similar to saying, "Well, we don't know exactly how much it will cost or how much you will save. However, we have done some analysis - based on the current economic environment - and we believe it will be somewhere between the Conservative and Optimistic Estimate." Answer Part 2 based on this knowledge.

If you were the director of the Transformation Station, would you build the warehouse? Why? Remember that the economy is volatile. While we have three estimates (conservative, most likely, and optimistic), the reality of our outcome is dependent on the economy which we have little control over.

Conservative Most Likely Optimistic Estimate Estimate Estimate Construction cost of $4,5000,00 $5,000,000 $4,250,000 warehouse 0 $212,500.0 Residual value $ 0.00 $180,000.00 0 Useful life 25 years 25 years 25 years Estimated annual net cost $765,000.0 $450,000 $585,000 savings 0 Rate of return 10% 12% 14% PV factor for ordinary 9.077 7.843 6.873 annuity PV factor for lump sum 0.092 0.059 0.038