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Dear sir
For the b part of thsi question the sensitivity analysis for sales revenue
Is NPV/contribution
But in the back (mark scheme) it is divided by 43441 which is sales revenue -tax for the year and discounted
They should also subtract the variable costs ?The question asks for the sensitivity of the selling price, and therefore it is only the revenue that will change (the variable costs are not affected by a change in the selling price). Therefore the answer is correct in taking the PV of the sales revenue.
If the question had wanted the sensitivity of the sales volume, then we would use the contribution because both the revenue and the variable costs would change.
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