28 Sample Company Sample Company LLC I Business Plan The chart in Figure 15 shows a sensitivity analysis of the project. The purpose of the sensitivity analysis is to determine how a change in the project's input data affects its financial result. It identifies the critical limits of change in these data. For example, revenue decreases or expenses increase that leave the NPV (net present value) positive. The more extensive these limits are, the less risky the project is. The sensitivity analysis algorithm is as follows: we change the selected parameters, reducing them by 50%, and then increasing by 50% in 10% increments; after each change, we recalculate its economy and display the size (NPV) on the graph. As can be seen from the diagram, the project's net present value remains positive with a 40% decrease in revenue and any changes in wages and capital costs. Figure 15
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