Solution-What are the project expected NPV

What are the project expected NPV

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Reference no: EM132733355

Problem - 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	-$70 million
Below average	0.20	-25 million
Average	0.50	12 million
Above Average	0.20	20 million
Boom	0.05	30 million

Required - What are the project's expected NPV, standard deviation, and coefficient of variation?

Reference no: EM132733355

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What are the project expected NPV

Reference no: EM132733355

Reference no: EM132733355

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