Find the projects npv and coefficient of variation

Assignment Help Financial Management

Reference no: EM131981299

Scenario Analysis

Shao Industries is considering a proposed project for its capital budget. The company estimates the project's NPV is $12 million. This estimate assumes that the economy and market conditions will be average over the next few years. The company's CFO, however, forecasts there is only a 50% chance that the economy will be average. Recognizing this uncertainty, she has also performed the following scenario analysis:

Economic Scenario	Probability of Outcome	NPV
Recession	0.05	-$76 million
Below average	0.20	-24 million
Average	0.50	12 million
Above average	0.20	24 million
Boom	0.05	26 million

What is the project's expected NPV, its standard deviation, and its coefficient of variation? Enter your answers for the NPV and standard deviation in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answers to two decimal places.

E(NPV)	$ million
sNPV	$ million
CVNPV

Reference no: EM131981299

Questions Cloud

Assuming all the interest is left in account : Approximately how much will the value of the account be in eighteen years, assuming all the interest is left in the account?

Dominant philosophical schools of thought in nursing : Debate with classmates on the dominant philosophical schools of thought in nursing (received view and perceived view).

Explain what rights and responsibility do food company have : What rights and responsibilities do Food companies have when it comes to labeling? What responsibilities does Facebook have in monitoring their web pages?

How did the risk-free asset improve portfolio theory : Describe Tobin’s Separation Theorem and its improvements to Markowitz portfolio theory. How did the risk-free asset improve portfolio theory?

Find the projects npv and coefficient of variation : Shao Industries is considering a proposed project for its capital budget. The company estimates the project's NPV is $12 million.

Common-size percentage for the net fixed assets : What is the common-size percentage for the net fixed assets?

Write an essay about static imagery such as billboards : Write an essay about Static imagery such as billboards, posters, Internet memes. You may identify other influence techniques that are not listed here.

Provide the appropriate data and calculations : To help finance your education, you need to choose whether or not to sell your 1,000 shares of Apple stock.

Perform an apv analysis of the project to determine its npv : At year 5, an additional $2 million of debt would be issued to pay some of that year's costs, and debt would then be maintained at $12 million in perpetuity.

User Account

All Pages