Question text

You perform a sensitivity analysis to identify the critical variable(s) in your analysis of a project. You run the analysis and obtain the following information on three variables, i.e. the sales growth rate, variable cost per unit, and cost of capital. Which one is the most critical? Which one is the least critical? Explain.

	Sales growth rate	VC per unit	Cost of capital
Original NPV	$20,000	$20,000	$20,000
Rate of change of variable	+5%	+10%	+3%
New NPV	$23,000	15000	$18,000