Project expected npv and standard deviation of npv

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Reference no: EM131886415

The managers of Merton Medical Clinic are analyzing a proposed project. The project’s most likely NPV is $120,000, but as evidenced by the following NPV distribution, there is considerable risk involved:

Probability 0.05 0.20 0.50 0.20 0.05 NPV ($700,000) (250,000) 120,000 200,000 300,000

a. What: are the project’s expected NPV and standard deviation of NPV?

b. Should the base case analysis use the most likely NPV or the expected NPV? Explain your answer.

Reference no: EM131886415

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