Expected npv and standard deviation of npv, Corporate Finance

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

Probability         NPV
0.05             -$700,000
0.2               -$250,000
0.5                $120,000
0.2                $200,000
0.05              $300,000

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

b. Compute CV?

b. Should the base case analysis use the most likely NPV or expected NPV? Explain your answer.

Posted Date: 2/28/2013 12:58:47 AM | Location : United States







Related Discussions:- Expected npv and standard deviation of npv, Assignment Help, Ask Question on Expected npv and standard deviation of npv, Get Answer, Expert's Help, Expected npv and standard deviation of npv Discussions

Write discussion on Expected npv and standard deviation of npv
Your posts are moderated
Related Questions
5. Produce a cash budget and determine the statement of external financing required for NSP Inc. for the months of December and January using the following information: • NSP Inc.

Nipissing, Inc,, is considering a new three year expansion project that requires an initial fixed asset investment of $2.4 million. The fixed asset falls in CCA Class 8 with a a 20

A firm announces its intent to undertake a levered recapitalization, issuing debt to repurchase a fraction of the outstanding common stock. Upon the announcement, its stock price

Have mergers affected competition? A: Federal Reserve data show that measured on the local level, where competition takes place, markets have actually experienced more bank


Question: 1929/ 2009: a remake of the worst financial crisis affecting the whole world? Central Banks and Governments are implementing all sorts of rescue plans incorporatin

Theoretically Modigliani and Miller (1958) took a fairly straightforward view of the purpose of a company in an economy. They pointed out that companies take cash from providers o

From a Corporate Finance and Governance perspective, the IMP is about answering three fundamental questions: 1. How much value does the organisation create/destroy today? 2.

Roman Roads has a number of capital projects available for investment this year but has access to a limited amount of capital.  Specifically, the firm has arranged to secure a $25

Question: (a) Describe why the discount rate equals opportunity cost of capital? (b) "Nominal rate less inflation rate is equal to real rate of return" - Is it true? Why or