A project has an initial investment of 100.You have come up with the following estimates of the project's cash flows:

Suppose the cash flows are perpetuities and the cost of capital is 10%.What does a sensitivity analysis of NPV (no taxes)show? (Answers appear in order: [Pessimistic,Most Likely,Optimistic].)
A)-50,20,+100.
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:

Suppose the cash flows are perpetuities and the cost of capital is 10%.What does a sensitivity analysis of NPV (no taxes)show? (Answers appear in order: [Pessimistic,Most Likely,Optimistic].)
A)-50,20,+100. 
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:

Suppose the cash flows are perpetuities and the cost of capital is 10%.What does a sensitivity analysis of NPV (no taxes)show? (Answers appear in order: [Pessimistic,Most Likely,Optimistic].)
A)-50,20,+100. 
B)-100,-50,+80. 
C)-50,+50,+70. 
D)+5,+11,+18

A Project Has an Initial Investment of 100