investment appraisal

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December 3, 2014 at 10:28 am #216731
sonia
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a cash has required investm,ent 25000 expected generate a cashflow 8000 for each year for 5 year the cost of capital 10%
WHAT IS SENSITIVITY CHANGE OF CASHFLW?
December 3, 2014 at 11:06 am #216754
John Moffat
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The PV of 8,000 a year for 5 years at 10% is 8,000 x 3.791 = 30,328

The NPV is 30,328 – 25,000 = 5,328

So the sensitivity = 5328/30328 = – 17.57% (negative, because we only worried if the inflow falls)
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