9. A project sensitivity analysis yielded the below graph. Considering that, which of the following statements is INCORRECT: $70,000 Net Present Worth (5) $50,000 $30,000- $10,000 Salvage value Growth rate 0- -$10,000- -$30,000- -$50,000 -20% -15% -10% Base 5% -5% Percent Deviation from Base (%) 0 10% Unit price Deman Fixed cost Variable cost 15% 20% a) The project's NPW is most sensitive to the changes in unit price and variable costs than other factors b) An increase in demand volume yield always translate into an increase in the project's NPW c) The changes in growth rate have no impact on the project NPW d) If fixed costs were to increase by 20%, the project would still be accepted. 10. For a certain investment project, the net worth can be expressed as a function of the sales price (X) and variable production cost Y of NPW= 12,550 (2X - Y)- 8000. The base values for X and Y are $25 and $15, respectively. If the sales price is increased by 15% over the base price, how much change in NPW can be expected: a) 15% b) 18% c) 22% d) 30%

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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9. A project sensitivity analysis yielded the below graph. Considering that, which of the following
statements is INCORRECT:
$70,000
Net Present Worth (5)
$50,000
$30,000-
$10,000-
0-
Salvage
Growth rate
-$10,000-
-$30,000
-$50,000
-20%
-15% -10%
Base
5%
-5%
Percent Deviation from Base (%)
0
10%
Unit price
Dema
Fixed cost
Variable cost
15%
20%
a) The project's NPW is most sensitive to the changes in unit price and variable costs than other
factors
b) An increase in demand volume yield always translate into an increase in the project's NPW
c) The changes in growth rate have no impact on the project NPW
d) If fixed costs were to increase by 20%, the project would still be accepted.
10. For a certain investment project, the net worth can be expressed as a function of the sales price (X) and
variable production cost Y of NPW= 12,550 (2X-Y)- 8000. The base values for X and Y are $25 and
$15, respectively. If the sales price is increased by 15% over the base price, how much change in NPW
can be expected:
a) 15%
b) 18%
c) 22%
d) 30%
Transcribed Image Text:9. A project sensitivity analysis yielded the below graph. Considering that, which of the following statements is INCORRECT: $70,000 Net Present Worth (5) $50,000 $30,000- $10,000- 0- Salvage Growth rate -$10,000- -$30,000 -$50,000 -20% -15% -10% Base 5% -5% Percent Deviation from Base (%) 0 10% Unit price Dema Fixed cost Variable cost 15% 20% a) The project's NPW is most sensitive to the changes in unit price and variable costs than other factors b) An increase in demand volume yield always translate into an increase in the project's NPW c) The changes in growth rate have no impact on the project NPW d) If fixed costs were to increase by 20%, the project would still be accepted. 10. For a certain investment project, the net worth can be expressed as a function of the sales price (X) and variable production cost Y of NPW= 12,550 (2X-Y)- 8000. The base values for X and Y are $25 and $15, respectively. If the sales price is increased by 15% over the base price, how much change in NPW can be expected: a) 15% b) 18% c) 22% d) 30%
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