a)
Expected NPV = 30,000
Standard Deviation = 236220.24
Please find the below table for further Calculation
Probability | NPV | Probability * NPV | NPV - Expected NPV | (NPV - Expected NPV)^2 | (NPV - Expected NPV)^2 * Probability |
0.05 | -700000 | -35000 | -730000 | 5.329E+11 | 26645000000 |
0.2 | -250000 | -50000 | -280000 | 78400000000 | 15680000000 |
0.5 | 120000 | 60000 | 90000 | 8100000000 | 4050000000 |
0.2 | 200000 | 40000 | 170000 | 28900000000 | 5780000000 |
0.05 | 300000 | 15000 | 270000 | 72900000000 | 3645000000 |
Expected NPV | 30000 | ||||
Total | 55800000000 | ||||
Standard Deviation | 236220.2362 |
b) Base case analysis should use Expected NPV as here we have identified all the possibility probabilities of inflows and expected NPV is based on that. In expected NPV we have also considered probability of negative flows which is ignored in most likely NPV.
Hope this helps, thanks and have a good day. Feel free to share your feedback.
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