Does anyone know the lowest voltage level that the analog input can see? Can it differentiate between 0.04 volt and 0.08 volts?
Thanks
Yes. It's a 10-bit DAC, so it reads between 0 and 1023. With the 5V reference, 5V corresponds to 1023 and one "step" is about 0.005V. With the optional 1.1V reference one "step" is about 0.001V (1mV).
However, make sure your signal isn't noisy. 
Quick calculation:
5V / 1024 = 4,8mV
And you can increase that (at the cost of losing range) if you use the 1,1V reference.
1,1 / 1024 = 1,1mV
In both cases not including error. But, as you can see it's far above the desired resolution of 40mV 
Great! Thanks guys.