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A positive net present value (NPV) has been calculated for a project to launch a new product. An additional calculation is required to identify the sensitivity of the NPV to changes in the forecast total sales volume.
The present value of which of the following would be used in the calculation?
Suggested Answer: A
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12 comments · newest first
FE
Fernanda
12 months ago
Net profit is the final result, not what we need for this calculation!
BU
Buffy
12 months ago
Wait, are we sure contribution is the right choice? Seems too simple.
LA
Latrice
1 year ago
Fixed overheads shouldn't be in the NPV calculation, right?
DE
Dean
1 year ago
I think operating profit is more relevant here.
TA
Tawna
1 year ago
Definitely need to look at contribution for NPV sensitivity.
CH
Charlene
1 year ago
I feel like net profit might be too broad for this specific sensitivity analysis; contribution seems more direct, but I could be wrong.
TR
Trinidad
1 year ago
Fixed overheads seem like they wouldn't change with sales volume, so I doubt they are relevant for this calculation.
MA
Maryann
1 year ago
I remember practicing a similar question where we had to consider operating profit, but I can't recall if that's applicable here.
MA
Mary
1 year ago
I think we need to focus on the contribution margin for the sensitivity analysis, but I'm not entirely sure if that's the right approach.
LE
Leslee
1 year ago
This question seems straightforward, I think the answer is Continuity Of Operations Plan.
TA
Tamar
1 year ago
I think the "D" is for "Decide," but I'm not 100% sure. I'll make an educated guess on this one.
GE
Geraldo
1 year ago
Hmm, I'm a little unsure about the formatting part. I know I need to copy the text and paste it, but I'm not 100% sure how to get the left-justified and bold formatting right. I'll have to be careful with that step.