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Use a Sensitivity Analysis to Adjust Cash Flows in NPV Refer to the data provided below for Proposal A and also provided in an Excel file in this link to answer the following questions. Proposal A Initial investment $100,000 Cash flow from operations Year 1 60,000 Year 2 40,000 Year 3 35,000 Disinvestment Life (years) 3 12% Discount rate (for all proposals) a. Prepare a table in Excel to compute the net present value for Proposal A and consider this the likely scenario. Next, prepare an optimistic and pessimistic scenario. For the optimistic scenario, increase each cash inflow by 10% and for the pessimistic scenario, decrease each net cash inflow by 10%.

Use a Sensitivity Analysis to Adjust Cash Flows in NPV Refer to the data provided below for Proposal A and also provided in an Excel file in this link to answer the following questions. Proposal A Initial investment $100,000 Cash flow from operations Year 1 60,000 Year 2 40,000 Year 3 35,000 Disinvestment Life (years) 3 12% Discount rate (for all proposals) a. Prepare a table in Excel to compute the net present value for Proposal A and consider this the likely scenario. Next, prepare an optimistic and pessimistic scenario. For the optimistic scenario, increase each cash inflow by 10% and for the pessimistic scenario, decrease each net cash inflow by 10%.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Use a Sensitivity Analysis to Adjust Cash Flows in NPV Refer to the data provided below for Proposal A and also provided in an Excel file in this link to answer the following questions. Proposal A Initial investment $100,000 Cash flow from operations Year 1 60,000 Year 2 40,000 Year 3 35,000 Disinvestment Life (years) 3 12% Discount rate (for all proposals) a. Prepare a table in Excel to compute the net present value for Proposal A and consider this the likely scenario. Next, prepare an optimistic and pessimistic scenario. For the optimistic scenario, increase each cash inflow by 10% and for the pessimistic scenario, decrease each net cash inflow by 10%.
Transcribed Image Text:Use a Sensitivity Analysis to Adjust Cash Flows in NPV Refer to the data provided below for Proposal A and also provided in an Excel file in this link to answer the following questions. Proposal A Initial investment $100,000 Cash flow from operations Year 1 60,000 Year 2 40,000 Year 3 35,000 Disinvestment Life (years) 3 12% Discount rate (for all proposals) a. Prepare a table in Excel to compute the net present value for Proposal A and consider this the likely scenario. Next, prepare an optimistic and pessimistic scenario. For the optimistic scenario, increase each cash inflow by 10% and for the pessimistic scenario, decrease each net cash inflow by 10%.
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