Multiple Choice
A project has an initial investment of 100. You have come up with the following estimates of the project's cash flows (there are no taxes) :![A project has an initial investment of 100. You have come up with the following estimates of the project's cash flows (there are no taxes) : Suppose the cash flows are perpetuities and the cost of capital is 10 percent. Conduct a sensitivity analysis of the project's NPV to variations in revenues. (Answers appear in order: [Pessimistic, Most Likely, Optimistic].) A) −30, +20, +70. B) −100, −50, +80. C) −50, +50, +70. D) +5, +11, +18.](https://d2lvgg3v3hfg70.cloudfront.net/TB7066/11ead63e_f052_18e4_93a1_ad92f6b8d45c_TB7066_00.jpg)
Suppose the cash flows are perpetuities and the cost of capital is 10 percent. Conduct a sensitivity analysis of the project's NPV to variations in revenues. (Answers appear in order: [Pessimistic, Most Likely, Optimistic].)
A) −30, +20, +70.
B) −100, −50, +80.
C) −50, +50, +70.
D) +5, +11, +18.
Correct Answer:
Verified
Correct Answer:
Verified
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