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Dear Sir,
10) In the question below (Mock MCQ quiz), the answer is given as a positive sensitivity yet I thought it should be negative.
A project requires an investment of $25,000 and is expected to generate a cash inflow of $8,000 a year for 5 years (with the first receipt in one years time).
The cost of capital is 10%.
What is the sensitivity to change of the cash inflow each year?
Ans is +17.58% not -17.58% why?
You are correct – it should be -17.58%
Thank you for letting me know. I have corrected the exam and will have it re-uploaded immediately.
i have tied this question .
sensitivity from my undestanding is NPV/ pv of project variable * 100
I did not get 17.58 but i got and answer relatively close.
NPV i got 5320. (30320-25000) 8000* 3.79 (df @10%)
2nd… why is the sensitivity negative?
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