Along with the sensitivity analysis, Kathy is including a scenario analysis for the project in...
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Finance
Along with the sensitivity analysis, Kathy is including a scenario analysis for the project in her report, giving the probability of the project generating a negative NPV. Her report includes the following information about the scenario analysis:
Data Collected
Outcome
NPVjj
Probability (Pjj)
Pessimistic
$5.62 million
0.35
Most likely
$7.94 million
0.30
Optimistic
$16.45 million
0.35
Probability Data for z
z
0.03
0.06
0.09
-1.0
0.1515
0.1446
0.1379
-0.8
0.2033
0.1949
0.1867
-0.6
0.2643
0.2546
0.2451
-0.4
0.3336
0.3228
0.3121
Complete the missing information in Kathys report: (Note: Round your answers to two decimal places.)
The expected net present value of the project is .
Standard deviation of the net present value (the NPV of the project is likely to vary by) $ million.
Assuming that probability distribution is normal, the value of z is .
Thus, the project has a chance to generate an NPV of less than $0.
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