Question
For the project above, board and management believe that while the expense numbers are likely good estimates they aren't as confident about the volume and
For the project above, board and management believe that while the expense numbers are likely good estimates they aren't as confident about the volume and revenue estimates. Therefore, they have asked for sensititivty analysis for those two variables. What is the NPV for the project using the project volume at +10% higher, +5% higher, base case, -5% lower and -10% lower? Similarly, what is the NPV if revenue per visit is also +10% higher, +5% higher, base case, -5% lower and -10% lower? For which variable are the estimates more sensitive to changes?
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