Assume a project has the following forecasted cash flows:
| Year |
Amount in $ |
| 0 |
-4,000 |
| 1 |
500 |
| 2 |
400 |
| 3 |
600 |
| 4 |
500 |
| 5 |
750 |
Answer the following:
- Assuming that a project has a discount rate of 10 percent, calculate its NPV. Should the project be accepted?
- Conduct a sensitivity analysis. Should the project be accepted now? Why?
Submit your answers in a 2- to 3-page Microsoft Word document and your calculations in a Microsoft Excel sheet.