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Hello Sir ! I have a question regarding the sensitivity analysis. I understood the example from the notes but i was wondering that there be any change if the examiner included taxation in a sensitivity analysis question.
There is a question in the kaplan kit named VICTORY and in the answer they have deducted tax at 30% from the contribution and used it to calculate the sensitivity of sales units and im quite confused.
ThanksYou need to calculate the PV of whatever it is that will change.
If you are calculating the sensitivity of the sales volume, then as sales volume changes the contribution will change. If there is tax involved then the tax on the contribution will also change.
(Fixed costs and capital costs will not change, and the tax on those will not change either)
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