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CAPITAL INVESTMENT APPRAISAL
                                                                                    CAPITAL INVESTMENT APPRAISAL





            Sensitivity Analysis






            - Measures the change in the NPV or IRR of a project if the value of one of the key input
                variables is changed. It is assumed all other variables will remain constant.

            - I.e. how much can the:

                    - Initial capital outlay increase                               i.e. if any of the variables change more
                    - The discount rate increase                                    than this the investment will no longer

                    - The residual value of the asset decrease                            be attractive (negative NPV).

                    - Operating cash flows decrease
                 So that the NPV is zero





















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