Question 18 Project A has the following estimated cash flows and present values: Year Cash flow $ Discount factor@ 12% Present value $ 0 Cost XXXXXXXXXX) 1.0 (95 000) 1–5 Contribution per annum 50 000...

Project A has the following estimated cash flows and present values:

Year                        Cash flow $       Discount factor@ 12%       Present value $

0   Cost                    (95 000)          1.0                                         (95 000)

1–5 Contribution
per annum               50 000             3.605                                    180 250

1–5 Fixed costs
per annum               (25 000)           3.605                                    (90 125)

5 Residual value       20 000             0.567                                    11 340

Required:
Calculate the sensitivity of the investment decision to a change in the annual contribution.