If firm demand quick results unlikely plant managers will concentrate only on npv. If variable may be necessary to conduct more research. If sales exceed expectations demand will be stronger: wages higher than forecast variable & fixed cost increase, scenario analysis, scenario analysis project analysis given particular combination of assumptions. Look at different but consistent combinations of variables: simulation analysis computer generates several hundred/thousand combinations of variables according to probability distributions specified by analyst, npv/outcomes of interest calculated for each combination. Just because break even =/= acceptable investment: consider time value must look for profit, npv break even analysis. 5. 45 leverage 1% drop in sales = 5. 45% drop in profit: greater dol greater sensitivity of profits. Real options & value of flexibility: option to expand, helpful decision tree diagram of sequential decisions & possible outcomes, figure 10. 3 p. 340. Invest if positi(cid:448)e npv / do(cid:374)"t if (cid:374)egati(cid:448)e npv: real options options to invest in/modify/dispose capital investment project.