Welcome back. In the last video, we calculated the NPV number. The NPV number is very high. So, it looks like this is a very good project. However, this NPV number was calculated based on a set of assumptions. The assumptions are listed here. So, before we go ahead and make the investment in the Anesthesia Information System, the first thing we should do is to make sure that the NPV calculation is robust to changing the assumptions a little bit. So, these assumptions were made to calculate the NPV number. So, we want to be sure that the NPV is still going to be a good number even if the assumptions were changed a little bit. So for example, the NPV calculation was done by assuming that the operation and maintenance cost is 18 percent. So, a manager may say, "What would happen to the NPV, if our operation and maintenance cost is not 18 percent, but 20 percent or 25 percent or 30 percent?" Excel allows us to do some sensitivity analysis. Excel allows us to re-calculate the NPV number for different values of the operation and maintenance costs. Let's do that first. We're going to re-calculate the NPV for different values of operation and maintenance costs. Let's say we're going to re-calculate the NPV. The formula for the NPV is stored in cell C21. I'm just copying this here and we're going to do maintenance cost sensitivity. We're going to re-calculate the NPV for different values of operation and maintenance cost. I'm going to format the cells to be percentage to decimal points. So, let's say we re-calculate for 15, 18, 20, 25 and 30 percent. We will re-calculate this formula for different values of maintenance costs. So, we select these cells and then say, Data, What-if Analysis and then Data table. We will re-calculate the NPV formula for different values of the column input and our column input is originally stored in cell P22. So, what we are saying is, we are going to create a new table where the formula is stored here, but we will change the column input that is stored in P22 to these values that we have entered here. So when I say okay, it re-calculates the NPV for different values of the maintenance cost. As you can see here, the NPV is still very good even if the operation and maintenance cost is as high as 30 percent. In this example, we did the sensitivity analysis based on changing one variable. Excel allows one to change two variables simultaneously. So, let's say we want to see how sensitive our NPV number is, if maintenance cost and one other variable is changed. Let's say we want to change maintenance costs as well as cost of capital. So, we have assumed a cost of capital of seven percent. What happens if the cost of capital is also changed from seven percent to 10 percent and 12 percent and 15 percent. So, in this example, now I am going to re-calculate the NPV by changing the maintenance cost and cost of capital at the same time. Again, the formula is stored in cell C21, so I'm just copying the formula for the NPV, and then we're going to do maintenance cost sensitivity; 15, 18, 20, 25 and 30. This is our maintenance cost sensitivity, and then here we are going to do cost of capital sensitivity. Seven, 10, 12 and 15. I'm going to center this. Okay, so we will re-calculate the NPV for different values of maintenance costs and different values of cost of capital. Okay. So, to do that we will select our space and then to Data, What-if Analysis and then Data table. So, our row input is cost of capital. So, the formula includes cost of capital and that number is originally stored in cell P3. So, what this is saying is, we are going to re-calculate the formula, where we're going to change the row import from P3 to the different values we have entered here. Similarly, we are going to re-calculate the formula by changing the the maintenance costs which is originally saved in cell P22. So, what this is saying is, we're going to re-calculate the NPV number, while changing the value that is stored in cell P22 and instead using the values that we have entered here. So, when I say okay, it is going to re-calculate the NPV for different values of cost of capital and maintenance cost. Let me just format this to all be dollar or currency amounts. I'm going to center this. All right. Now, it looks like even when this NPV number is calculated based on different values of cost of capital and maintenance cost, it is still a very high number. For example, even when the cost of capital is 15 percent and the operation and maintenance cost is 30 percent, still the NPV is a very high positive number. So, to summarize, what we did in this lesson was, we took the NPV number and evaluated whether the NPV number that is based on a set of assumptions is robust to the assumption that we're making. In the last example, we changed two parameters; cost of capital and maintenance cost. This project turned out to be a good project, even when we almost doubled the cost of capital and almost doubled the maintenance cost. So, the main lesson is, we make some assumptions to calculate the financial viability of a project, but then we test the NPV calculation to the assumptions that we make, and if it is still a good project, then we go ahead and make the investment. Thank you.