You Have Come Up with the Following Estimates of Project

question 44

Multiple Choice

You have come up with the following estimates of project cash flows:
$$\begin{array} { l c c c } & \text { Pessimistic } & \text { Most Likely } & \text { Optimistic } \\\text { Investments } & - 100 & - 80 & - 60 \\\text { Total Revenues } & + 30 & + 40 & + 50 \\\text { Total Costs } & - 20 & - 15 & - 10\end{array}$$
The cash flows are perpetuities and the cost of capital is 8%. What does a sensitivity analysis of NPV (without taxes) show?

• A) 25, +232.50, +440
• B) -100, +500, +800
• C) -90, -55, -20
• D) None of the above

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Definitions:

Quota

A restriction on the number of units of a particular product that can be imported into a country.