Discounted Cash Flow Modelling and Sensitivity and Risk Analysis
For the purpose of this coursework, you are required to do the following:
1. Calculate the Discounted Cash Flows (DCF) for 10-years and derive the Net Present Value using the uncertain input variables. (5 Marks)
2. Perform a single simulation of 10,000 iterations for the NPV model and determine the probability of getting a negative (zero) NPV at 95% Confidence Interval (2 Marks)
3. Perform sensitivity analysis for the NPV output to determine the variable with the largest impact on NPV (Biggest Driver of NPV) using the following:
a) Change in Output. (2 Marks)
b) Regression Coefficient. (2 Marks)
c) Correlation Coefficient. (2 Marks)
2
d) Contribution to Variance. (2 Marks)
Total (15 Marks)
Write a Report to your COO to communicate the findings from your analyses. The report should describe the purpose and result of your analyses
