A Project Has an Initial Investment of 100 Suppose the Cash Flows Are Perpetuities and the Cost of Up

question 25

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) : $\begin{array} { | l | c | c | c | } \hline & \text { Pessimistic } & \text { Mast Likely } & \text { Optimistic } \\\hline \text { Revenues } & 15 & \mathbf { 2 0 } & \mathbf { 2 5 } \\\hline \text { Costs } & 10 & 8 & 5 \\\hline\end{array}$ 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.

---

Definitions:

Ocher And Charcoal

Natural pigments used since prehistoric times for art, ocher is an earthy pigment ranging in color from yellow to deep orange or brown, while charcoal is a black substance made by burning wood with reduced oxygen.

Incised Stone

A type of artifact or monument featuring designs, symbols, or texts that have been cut or carved into its surface.

Venus Of Willendorf

A prehistoric statuette discovered in Austria, dating back to around 28,000–25,000 BCE, representing a female figure and is associated with fertility symbols.

Limestone

A sedimentary rock consisting mainly of calcium carbonate, often used in building materials and sculptures for its ease of carving and durability.