December 2016 Q2 b)

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June 8, 2017 at 6:09 pm #391949
helensqq
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question asks % change in selling price to have a zero NPV, is it asking for IRR? I don’t understand why use selling price X0.75 Xdf
June 9, 2017 at 7:46 am #392089
John Moffat
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No – it is asking for the sensitivity (you can find a lecture on sensitivity calculations in the Paper F9 section of this website).
The 0.75 is to account for the tax of 25%
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