A Project Has an Initial Investment of 100

question 54

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) :

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.

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