Hartley Corp. is considering a project that could be a "make-it-or-break-it" project for the firm. Using its managers' input variable estimates, the project has a positive NPV = $334,492. Naturally, Hartley is quite concerned about the input variables it has used. A sensitivity analysis has been performed on a few of the key variables. Below, are the values of the resulting NPVs if the corresponding input variable is changed by 1 percent. What is the sensitivity index of the variable that has the most importance in terms of the project's value?

A) 10.1%
B) -13.8%
C) 18.4%
D) -19.7%
E) 20.8%

Question

Hartley Corp. is considering a project that could be a "make-it-or-break-it" project for the firm. Using its managers' input variable estimates, the project has a positive NPV = $334,492. Naturally, Hartley is quite concerned about the input variables it has used. A sensitivity analysis has been performed on a few of the key variables. Below, are the values of the resulting NPVs if the corresponding input variable is changed by 1 percent. What is the sensitivity index of the variable that has the most importance in terms of the project's value?

A) 10.1% 
B) -13.8% 
C) 18.4% 
D) -19.7% 
E) 20.8%

Quizplus · Accepted Answer

The Answer is D