Klott Company used scenario analysis to evaluate a capital budgeting project. The analysis generated a net...
Klott Company used scenario analysis to evaluate a capital budgeting project. The analysis generated a net present value (NPV) equal to $10,500 and a standard deviation (σ) equal to $12,083. The project's coefficient of variation (CVNPV) is _____.
Group of answer choices
1.15
0.25
0.87
10.50
13.90
Homework Answers
Answer: The first option is correct
Coefficient of variation=Standard deviation of the Net Present
Value/Expected Net Present Value
=12083/10500=1.15
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Klott Company used scenario analysis to evaluate a capital
budgeting project. The analysis generated a net...
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Scenario Analysis 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 -$54 million Below average 0.20...
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Shao Industries is considering a proposed project for its capital budget. The company estimates the project's...
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:
Problem 13-11 Scenario Analysis Shao Industries is considering a proposed project for its capital budget....
Shao Industries is considering a proposed project for its capital budget. The company estimates the project's NPV is $12...
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 -$80 million Below average 0.20 -24 million ...
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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:
Problem 13-11 Scenario Analysis Shao Industries is considering a proposed project for its capital budget....
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2. Cheng Inc. is considering a capital budgeting project that has an expected return of 25% and a standard deviation of 30%. What is the project's coefficient of variation?
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