The curve implies the project will be negative or possitive

The curve implies the project will be: negative or possitive

Expected NVP of the project is:

A. 2.66 million

B. 5.80 million

C. 1.03 million

D. 1.93 million

Standard deviation of NVP is:

A. 7.13

B. 5.30

C. 6.56

D. 6.16

Anusha is a risk analyst. She is conducting a sensitivity analysis to evaluate the riskiness of a new project that her company is considering investing in. Her risk analysis report includes the sensitivity curve shown on the graph. NPV (Millions of dollars) Base Case NPV Base Case Cost of Capital 12 15 COST OF CAPITAL (Percent) This curve implies that the project is not very sensitive to changes in cost of capital. The project\'s NPV is likely to if the cost of capital increases to 15% Along with the sensitivity analysis, Anusha is including a scenario analysis for the project in her report, giving the probability of the project generating a negative NPV. Her report includes the following information about the scenario analysis: Data Collected Probability Data for z 0.03 Probability (Pj) 0.20 0.45 0.35 0.06 0.3336 0.3228 0.312:1 0.2643 0.2546 0.245:1 0.2033 0.19490.1867 0.1515 0.1446 0.1379 0.09 Outcome Pessimistic Most likely Optimistic NPV $3.50 million $5.62 million $11.34 million 0.6 0.8 1.0 Complete the missing information in Anusha\'s report: The expected net present value of the project is Standard deviation of the net present value (the NPV of the project is likely to vary by) million.

Solution