Sensitivity analysis is a method to find out the most effective and sensitive factors of the investment for economy in those uncertain factors.It can help to ensure which risk can make an important effect in the project and find out how well affect the goal(Ross, Westerfield and Jordan, 2000).
As the cash flows and the net present value is already calculated in the second part, the process of the project can be showed clearly. However, to make a more clearance of analysis to the proposed project, a sensitivity analysis is also important.
Since the sales revenue, cost of goods sold, staff costs, advertising cost and tax are already known, the NPV can be calculated by assuming the initial sales revenue was 10% higher and then again assuming the initial sales revenue was 10% lower. The fluctuation of data analyze can be use to find out which factor is more sensitivity.Then it can be applied in other remaining datas as well.