A project has an initial investment of 100. You have come up with the following estimates of the project's cash flows (there are no taxes):

Suppose the cash flows are perpetuities and the cost of capital is 10 percent. Conduct a sensitivity analysis of the project's NPV to variations in revenues. (Answers appear in order: [Pessimistic, Most Likely, Optimistic].)
A)−30, +20, +70.
B)−100, −50, +80.
C)−50, +50, +70.
D)+5, +11, +18.

Question

A project has an initial investment of 100. You have come up with the following estimates of the project's cash flows (there are no taxes):

Suppose the cash flows are perpetuities and the cost of capital is 10 percent. Conduct a sensitivity analysis of the project's NPV to variations in revenues. (Answers appear in order: [Pessimistic, Most Likely, Optimistic].)
A)−30, +20, +70. 
B)−100, −50, +80. 
C)−50, +50, +70. 
D)+5, +11, +18.

Quizplus · Accepted Answer

The Answer of A project has an initial investment of 100. You have come up with the following estimates of the project's cash flows (there are no taxes):

Suppose the cash flows are perpetuities and the cost of capital is 10 percent. Conduct a sensitivity analysis of the project's NPV to variations in revenues. (Answers appear in order: [Pessimistic, Most Likely, Optimistic].)
A)−30, +20, +70. 
B)−100, −50, +80. 
C)−50, +50, +70. 
D)+5, +11, +18.

A Project Has an Initial Investment of 100