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In a Sensitivity Analysis, a decision maker may be uncertain of the firm's future WACC. The sensitivity analysis is used to reveal the impact of

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In a Sensitivity Analysis, a decision maker may be uncertain of the firm's future WACC. The sensitivity analysis is used to reveal the impact of variance in the WACC. With a baseline estimate of the WACC at 10%, and the assumption that the WACC has increased to 15% in the future, what is the baseline net present value and the new net present value using the sensitivity analysis for Project A? YEAR PROJECT A PROJECT B 0 -1,000 -2.750 1 360 725 2 370 725 3 380 800 4 390 1,400 5 400

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