Which of the following statements regarding this graph are correct (true)? There are more than one statement that is correct. Mark/select all the ones you believe to be correct. The graph indicates the impact on the NPV of variations in each variable separately (Price, quantity, tax shelter, and production costs) Out of all the negative related variables, the most critical is tax shelter The NPV of the project is equal to zero when the production costs are at about 95% of expected levels
Which of the following statements regarding this graph are correct (true)? There are more than one statement that is correct. Mark/select all the ones you believe to be correct. The graph indicates the impact on the NPV of variations in each variable separately (Price, quantity, tax shelter, and production costs) Out of all the negative related variables, the most critical is tax shelter The NPV of the project is equal to zero when the production costs are at about 95% of expected levels
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Which of the following statements regarding this graph are correct (true)? There are
more than one statement that is correct. Mark/select all the ones you believe to be
correct.
The graph indicates the impact on the NPV of variations in each variable
separately (Price, quantity, tax shelter, and production costs)
Out of all the negative related variables, the most critical is tax shelter
The NPV of the project is equal to zero when the production costs are at about
95% of expected levels
Transcribed Image Text:The following graph shows the summary of a sensitivity analysis (the graphical
representation of the NPV table).
2500
2000
1500
1000
500
0
-500
-1000
-1500
-2000
-2500
This is a graph that shows the results of
sensitivity analysis. There are 4 variables
shown Price, quantity, and tes shelber hav
upward slope and one variable, production
costs has downward sled
1.05 1.10 1.15
1.20
Production costs
Price
"Quantity
Tax shelters
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