A machine requires an initial investment of $500,000.

CIMA P2 Question Answer

A machine requires an initial investment of $500,000. The net present value (NPV) of the investment in the machine is $36,500.

Which of the following statements is correct in relation to the sensitivity of the investment?

The initial investment can increase by no more than 7.3% before the project is not viable.

The NPV can decrease by no more than 7.3% before the project is not viable.

The initial investment can increase by no more than 13.7% before the project is not viable.

The NPV can decrease by no more than 13.7% before the project is not viable.

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