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Problem 5 (20%): Sensitivity analysis were done on a refinery project. It was found that oil price & gas price are the most sensitive
Problem 5 (20%): Sensitivity analysis were done on a refinery project. It was found that oil price & gas price are the most sensitive parameters and they could change the outcome of the project financials. It was also found that the project yields an NPV of $2,000,000 based on $25 oil price and $7.5 gas price per volumetric unit. The advisers presented the following data with their report. Oil price Gas Price NPV $20 $6.5 $1,200,000 $30 $8.5 $3,000,000 $20 $8.5 $1,500,000 $30 $6.5 $2,300,000 Oil price Probability $20 60% $30 Gas price $6.5 55% $8.5 Calculated the expected NPV. Comment on the results
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