Question

How would you interpret the results given below from a scenario analysis? Worst Most Best case likely case case PW (10%) $150,000 $212,000 $460,000 IRR 2.10% 14.60% 33% Scenario Analysis Table Because one of the scenarios shows the project as unprofitable, the project should be considered risky and be subject to greater scrutiny in its planning and forecasting Since the most-likely case has a PW > 0, the project should be considered acceptable. Since the average of the three cases is a positive present worth, the project is acceptable. Since the worst-case has a negative present worth, this project must be rejected.

Answer 1

C) Since the average of three cases is a positive present worth,the project is acceptable.

In this scenario the average of three cases is a positive present worth hence the project is acceptable.