Standard deviation of npv

Assignment Help Financial Accounting

Reference no: EM13918538

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

Probability NPV

0.05 (700,000)

0.20 (250,000)

0.50 120,000

0.20 200,000

0.05 300,000

A). What are the project's expected NPV and the standard deviation of NPV?

B). Should the base case analysis use the most likely NPV or the excepted NPV? Explain your answer?

Reference no: EM13918538

Questions Cloud

Paper identifying the supply chain : Write a 700- to 1,050-word paper that identifies each link in the supply chain and the purpose and value in each. For example, if the shoe industry were to be chosen, the supply chain might look something like:

Determine the priorities for the desirability criterion : Determine the priorities for the desirability criterion. Compute the consistency ratio. Are the sales manager's judgments consistent? Explain.

Required rate of return be higher-lower than required return : If a stock has a beta of 1.3 would its required rate of return be higher or lower than the required return for the average stock on the market? Why? Would it be more or less risky than holding a fund that replicated the S&P 500 Index ? Why?

Explain how alliances support operations management strategy : Explain how alliances or partnerships with other companies support operations management strategy, and clarify the importance of having them aligned with the company's operations management strategy in 2-3 paragraphs.

Standard deviation of npv : What are the project's expected NPV and the standard deviation of NPV-Should the base case analysis use the most likely NPV or the excepted NPV

Share of preferred stock pays a constant dividend : Assume a share of preferred stock pays a constant dividend of $1.15. If the required return is 5%, what is the expected price of this preferred stock?

Assignment-the key concepts in economics : Identify at least four (4) key points of a relevant economic article from either the Library or a newspaper. The article must deal with any course concepts covered in Weeks 1-8.

Moral hazard in economic theory : In economic theory, a moral hazard is a situation where a party will have a tendency to take risks because the costs that could result will not be felt by the party taking the risk.

Determine the priorities for the four computers relative : Determine the priorities for the four computers relative to the performance criterion. Compute the consistency ratio. Are the judgments regarding performance consistent? Explain.

User Account

All Pages