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Sir ,
To determine sensitivity analysis there are two methods:
One is to determine the %age change in a project variable which results in a -NPV
to my understanding that means IRR. (If I am not wrong)The other method determines the %age change in NPV which results from a fixed %age change
can u please explain me this with an example.Thank you.
Sensitivity is calculated as the NPV divided by the PV of the flows that are changing.
I explain this, with examples, in my free lectures on investment appraisal under uncertainty.
The lectures are a complete free course for Paper F9 and cover everything needed to be able to pass the exam well.
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