Standard deviation of the net present worth for the strategy

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Reference no: EM132037085

A company's marketing strategy will last two years and produce revenue in years 1 and 2 only. The strategy can result in a success, a moderate success, or a failure. The marketing strategy will cost $60,000 immediately (year 0), $38,000 in year 1, and $12,000 in year 2. There is uncertainty with projected revenues, but the forecasted revenues and probabilities for the marketing strategy are as follows: - Success: Year 1: $89,000; Year 2: $112,000; Probability: 0.26 - Moderate success: Year 1: $78,000; Year 2: $70,000; Probability: 0.42 - Failure: Year 1: $39,000; Year 2: $50,000; Probability: 0.32 The company's MARR is 15%. You can ignore any other costs except for the marketing costs. Calculate the standard deviation of the net present worth for the strategy. HINT: it is easier to calculate the net present worth of each separate result first (success, moderate success, failure) before dealing with the probabilities

Reference no: EM132037085

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