What is the projects expected npv in standard deviation

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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. This 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

What is the projects expected NPV, in standard deviation, and coefficient of variations?

Reference no: EM13145062

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