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acca2050 says

Hey John, Why u didn’t do cost of captial sensitivity? However I done it by my self and the IRR comes = 15.842%. I took 20% as another npv that resulted in ($26306).

Now as per your formulae: NPV/PV of changes x 100% = 15%/15.842% x 100% = ~95%

BUT I think its wrong?

johnmoffat says

Errrr….yes you are wrong

The change is 15.842-15 = 0.842.

So the percentage change from the actual cost of capital is 0.824/15 x 100% = 5.5%

(The answers to all of the examples are at the back of the Course Notes )

acca2050 says

ok cool

Oboro says

Pls sir I still do not understand why sales volume is -2.2%

johnmoffat says

At present the NPV is 5329, and we need to know the % fall in sales volume that will give NPV of zero.

If the sales volume per year falls, then the contribution per year falls, and therefore so too will be present value of the contribution flows. At present the present value of the contribution flows is 241189 – we need this to fall by 5329, which is a 2.2% fall.

kaish says

and what about section c answer?

johnmoffat says

You can find the answer at the back of the course notes.