The Scenario
A South African food manufacturer is considering a R10M factory expansion. Base case projections show NPV of R2.4M over 8 years. The board wants to know: "How wrong can we be before this investment destroys value?"
The Brief
Conduct a sensitivity analysis on the base case NPV. Vary revenue (±20%), operating costs (±15%), and the discount rate (10%-16%). Identify the break-even value for each variable.
Deliverables
- The base case NPV calculation with all assumptions stated
- A sensitivity table: Variable, Base Case, -20%/-15%, +20%/+15%, NPV at each, Break-Even Value
- A tornado chart description ranking variables by impact on NPV (which variable matters most?)
- A scenario analysis: best case (all variables favourable) vs worst case (all variables adverse)
Submission Guidance
The break-even value tells the board "revenue can drop by X% before the NPV hits zero." This is far more useful than a single-point NPV estimate.
Submit Your Work
Your submission is graded against the rubric on the right. If you pass, you get a public Badge URL you can share on LinkedIn. There is no draft save, so work offline first and paste your finished response here.