Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are doing a sensitivity analysis of a project and have found the following: The projects NPV is very sensitive to its annual expense estimate

You are doing a sensitivity analysis of a project and have found the following: The projects NPV is very sensitive to its annual expense estimate. The projects NPV is not sensitive to its increase in net working capital estimate. Which of the following statements is most correct concerning these two estimates?

a. It is important to have more accurate annual expense estimate.

b. Remove the annual expense estimate from the projects NPV calculation.

c. Remove the increase in NWC estimate from the projects NPV calculation.

d. It is important to have more accurate increase in NWC estimate.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Understanding Futures Markets

Authors: Robert Kolb, James Overdahl

6th Edition

1405134038, 9781405134033

More Books

Students also viewed these Finance questions