PRACTISE QUESTION OF INVESTMENT APPRAISAL UNDER UNCERTAINTY

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June 15, 2019 at 12:27 pm #520533
stavraiou
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Good evening Sir,

In question no3 of chapter’s 10 practice questions to calculate the sensitivity why do we take the NPV/Contribution and not the NPV/Sales Revenue?

Sales revenue won’t change as well once the sales volume’s changed?

Thank you
June 15, 2019 at 2:44 pm #520541
John Moffat
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If sales volume changes, then revenue and variable costs change i.e. the contribution will change.
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