| Course | FI499 Bachelor's Capstone in Finance |
|---|---|
| Unit | Unit 8 |
| Paper type | Sensitivity analysis |
| Length | About 630 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Finance |
| Updated | October 2026 |
Free sample paper for FI499 Unit 8
How Far Each Input Can Move Before the Answer Flips: A Unit 8 Capstone Sensitivity Analysis of a Swim School Acquisition
[Student Name]
Purdue University Global
FI499: Bachelor's Capstone in Finance
Unit 8 Sensitivity Analysis
[Instructor Name]
[Date]
Tidewell, Paddlemark and every figure are composite; the books cited are real.
Method
The Unit 5 model values Paddlemark at $22.54 million. For each input, the analysis leaves the other eleven assumptions untouched and finds the level at which value equals $21.0 million. The distance between the base value and that switching value shows how much room the answer has. A small distance on an uncertain input is the warning sign (Brealey et al., 2020). One-at-a-time tests understate risk when inputs move together, so a combined case is added at the end (Damodaran, 2012).
Exhibit 1: Switching Values
Steady-state margin (A4). Base 27 percent; switching value about 24.9 percent; room 2.1 points. Paddlemark's margin today is 25.0 percent. If it simply stays where it is, value is about $21.05 million, essentially the price.
Annual savings (A5). Base $350,000; switching value about $157,000; room $193,000, or 55 percent of the estimate.
First-year revenue change (A1). Base a 2 percent fall; switching value an 8.8 percent fall; room 6.8 points.
Discount rate (A10). Base 10.5 percent; switching value about 11.05 percent; room 0.55 points.
Terminal growth (A3). Base 2.5 percent; switching value about 1.74 percent; room 0.76 points.
Exhibit 2: Values Across Stated Ranges
Margin from 24 to 29 percent: value from $20.31 million to $24.03 million.
Discount rate from 9.5 to 11.5 percent: value from $25.95 million to $19.89 million.
Savings from zero to $450,000: value from $19.75 million to $23.34 million.
First-year revenue from a 10 percent fall to no change: value from $20.73 million to $22.99 million.
Terminal growth from 1.5 to 3.0 percent: value from $20.57 million to $23.72 million.
Combined case, savings of zero together with first-year revenue down 6 percent: $18.85 million.
The margin has the least room relative to its uncertainty: the deal works only if Paddlemark's margin rises from where it is today, and the statements in Unit 4 showed it falling for three years, so margin recovery is the assumption that decides this case.
Commentary
Room alone does not rank the inputs; room must be compared with how uncertain each input is.
The discount rate has only 0.55 points of room, but it rests on the bank's quoted loan rate and the owners' own required return, and Tidewell's owners can judge whether 11 percent would be a fairer required return. The terminal growth rate has 0.76 points of room on an input that economists would place between 2 and 3 percent with some confidence. First-year revenue has 6.8 points of room, a wide margin even for an uncertain input. The savings have room of more than half the estimate.
The margin is different. Its room is 2.1 points, and its direction is in doubt, since Unit 4 found it falling for three years. If Tidewell's scheduling system does not lift Paddlemark's margin at all, the deal is worth roughly what it costs, and any further slippage makes it a loss.
What This Means for the Recommendation
The recommendation must rest on evidence that Tidewell can raise Paddlemark's margin, not just on the assumption that it will. Before closing, Tidewell should feed two Paddlemark schools' class rosters through its own scheduling software and measure the projected change in instructor hours per student. Without that test, the deal's value case depends on a single unproven belief (Koller et al., 2020).
The combined case also deserves attention. A weak rebrand with no savings would cost Tidewell's owners about $2.15 million against the price, which supports the enrollment holdback recommended in Unit 7.
References
Brealey, R. A., Myers, S. C., & Allen, F. (2020). Principles of corporate finance (13th ed.). McGraw-Hill Education.
Damodaran, A. (2012). Investment valuation: Tools and techniques for determining the value of any asset (3rd ed.). Wiley.
Koller, T., Goedhart, M., & Wessels, D. (2020). Valuation: Measuring and managing the value of companies (7th ed.). Wiley.
The Purdue Global FI499 Unit 8 instructions
The eighth FI499 unit asks for a sensitivity analysis of your capstone valuation. Explain your method, including what is held constant. Solve each important input for its switching value and report the distance from base. Show values across a stated, defensible range for each input. Add at least one combined case, since inputs can move together. Then interpret: compare each input's room with how uncertain it is, drawing on evidence from earlier units, rather than ranking by room alone. Name the assumption that decides the case and explain why. State what the result means for the recommendation, ideally an action that would reduce the uncertainty. Use exhibits for the numbers and prose for the judgment. Cite corporate finance and valuation texts in APA 7.
How the FI 499 Unit 8 example is put together
The sample's first exhibit lists switching values: margin about 24.9 percent against a base of 27, savings about $157,000 against $350,000, revenue down 8.8 percent in year one against a base of 2, a discount rate of 11.05 percent against 10.5 and terminal growth of 1.74 percent against 2.5. It notes that a margin left at today's 25.0 percent gives about $21.05 million. The second exhibit runs ranges, from $25.95 million to $19.89 million across discount rates of 9.5 to 11.5 percent. A combined case of zero savings and a 6 percent revenue drop gives $18.85 million. The highlighted sentence names margin recovery as decisive, and the close proposes testing the buyer's scheduling on two schools.
Where the points sit in the FI499 Unit 8 rubric
Sensitivity analyses in FI499 earn points for identifying which assumption decides the answer and why. Graders check that switching values are computed correctly, that ranges are stated and defensible, and that at least one combined case recognizes inputs moving together. The rubric rewards weighing each input's room against the evidence behind it, since a small margin on a well-supported input matters less than a moderate one on a doubtful input. Turning the result into an action shows the analysis informs the decision. Papers that present a chart without interpretation, rank inputs by room alone or ignore what earlier units found about an input lose points.
FI499 Unit 8 help: mistakes that cost points
Weak Unit 8 analyses produce a table of values at plus and minus 10 percent for every input and stop. Others rank inputs only by numerical room, which can point to the discount rate when the real doubt lies elsewhere. Combined cases are often left out. Findings from earlier units, such as a trend running against an assumption, are not brought in. Results never reach the recommendation. If your capstone's valuation rests on different drivers, the switching values can be solved for those and weighed against what your own evidence shows. The analysis should end by saying what to do about the decisive input.
Get an FI499 Unit 8 example written to your instructions
Upload your valuation, the assumption set and the Unit 8 instructions with the rubric. For each input, the analysis solves for the level where your recommendation would flip, ties the range to evidence in your own case and names the assumption the conclusion depends on. As a first sample it comes free, generally within 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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FI499 Unit 8 questions, answered
What is a switching value?
The level of one input, with every other held at base, at which the decision changes, here the point where the rival's value equals its price. It answers a sharper question than a range of outcomes: how wrong can this assumption be before the answer reverses? The sample reports each one beside its base case, so the distance between them can be read directly.
Why not use a tornado chart or a two-way grid?
Either can supplement the analysis, and some sections require one. The sample relies on switching values because the capstone question is about the recommendation, and a switching value states the threshold in the same terms. If your prompt asks for a chart or grid, the custom version adds it while keeping the verdict in the prose where a reader will find it.
How is the decisive assumption chosen when two are close?
By combining distance with evidence. The discount rate has the smallest numerical headroom, but its inputs come from market data and a lender's quote. The margin has more room, yet the target's own statements show it moving the wrong way for three years running. The sample names margin because the case itself gives a reason to doubt it.
Where can I find a free FI499 Unit 8 sample paper?
This page holds a full FI499 Unit 8 sensitivity analysis of a composite swim school acquisition, with switching values, ranges, a combined case, the decisive assumption and APA 7 references.
Why is the margin decisive when the discount rate has less room?
Because the discount rate rests on a loan quote and a stated equity return, while the margin's direction is in doubt. The rival's margin has fallen for three years, and if it simply stays at 25 percent the deal is worth about its price.