Homework Answers
Scenario Analysis can further be extended to the probability of happening of each scenario.
It is good that it only cinsiders the most important factors.
It has few scenarios not very large number.
It does not consider a future outcome but different scenarios out of which anything can happen. Thats a Drawback.
Therefore, It considers the alternative scenarios.
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What is the drawback of scenario analysis? It doesn't tell about the probability of the worst...
How would you interpret the results given below from a scenario analysis? Worst Most Best case...
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...
Scenario analysis typically looks at Only two cases: the best and the worst case True or...
Scenario analysis typically looks at Only two cases: the best and the worst case True or False?
Question 10 10 pts Roenfeld Corp uses scenario analysis in order to determine an expected NPV...
Question 10 10 pts Roenfeld Corp uses scenario analysis in order to determine an expected NPV for its projects. The base case, best case, and worse case scenarios as well as their probabilities of occurrence are provided below for a new project. What is the project's coefficient of variation (CV) of NPV and what is the (cumulative) probability of a negative NPV for the project? Probability of Occurrence 0.20 Scenario Best case Base case Worst case Project's NPV $28,000 $13,000...
The Lake Placid Town Council decided to build a new community center to be used for...
The Lake Placid Town Council decided to build a new community
center to be used for conventions, concerts, and other public
events, but considerable controversy surrounds the appropriate
size. Many influential citizens want a large center that would be a
showcase for the area. But the mayor feels that if demand does not
support such a center, the community will lose a large amount of
money. To provide structure for the decision process, the coun- cil
narrowed the building alternatives...
3. Scenario Analysis (LO2) Whitewater Transmissions Inc. has the following estimates for its new gear assembly...
3. Scenario Analysis (LO2) Whitewater Transmissions Inc. has the following estimates for its new gear assembly project: price $1,700 per unit, variable costs $480 per unit; fixed costs = $4.1 million; quantity 95,000 units. Suppose the company believes all of its estimates are accurate only to within +15 percent. What values should the company use for the four variables given here when it performs its best-case scenario analysis? What about the worst- case scenario?
The Lake Placid Town Council decided to build a new community center to be used for...
The Lake Placid Town Council decided to build a new community center to be used for conventions, concerts, and other public events, but considerable controversy surrounds the appropriate size. Many influential citizens want a large center that would be a showcase for the area. But the mayor feels that if demand does not support such a center, the community will lose a large amount of money. To provide structure for the decision process, the council narrowed the building alternatives to...
i need 100% fresh and new answers for both parts 3.1 Perform a scenario analysis on...
i need 100% fresh and new
answers for both parts
3.1 Perform a scenario analysis on the data provided Case Study: Assume that the company, where you are working as a team in Financial Department, is considering a potential project with a new product that is expected to sell for an average price of $22 per unit and the company expects it can sell 650 000 unit per year at this price for a period of 4 years. Launching this...
Question 6 (of 19) 10.00 points Problem 11-3 Scenario Analysis [LO2 Sloan Transmissions, Inc., has the...
Question 6 (of 19) 10.00 points Problem 11-3 Scenario Analysis [LO2 Sloan Transmissions, Inc., has the following estimates for its new gear assembly project price # $3,000 per unit variable costs $800 per unit, fixed costs $1.8 million; quantity 90,000 units. Suppose the company believes all of its estimates are accurate only to within 120 percent. What values should the company use for the four variables given here when it performs its best-case scenario analysis? what about the worst-case scenario?...
What are the best and worst case Variable cost? You are considering a new product launch....
What are the best and worst case Variable cost?
You are considering a new product launch. The project will cost $2,075,000, have a four- year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 220 units per year; price per unit will be $18,800, variable cost per unit will be $12,350, and fixed costs will be $610,000 per year. The required return on the project is 11 percent, and the relevant tax rate is...
4. Sensitivity and scenario analysis Different techniques for analyzing project risk require different input variables...
4. Sensitivity and scenario analysis Different techniques for analyzing project risk require different input variables and assumptions. Suppose you are using the scenario analysis technique to evaluate project risk. You would change in the model to evaluate the effect of the input factors on the expected value. Tanya is a risk analyst. She is conducting a sensitivity analysis to evaluate the riskiness of a new project that her company is considering investing in. Her risk analysis report includes the sensitivity...
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...
Question 10 10 pts Roenfeld Corp uses scenario analysis in order to determine an expected NPV for its projects. The base case, best case, and worse case scenarios as well as their probabilities of occurrence are provided below for a new project. What is the project's coefficient of variation (CV) of NPV and what is the (cumulative) probability of a negative NPV for the project? Probability of Occurrence 0.20 Scenario Best case Base case Worst case Project's NPV $28,000 $13,000...
The Lake Placid Town Council decided to build a new community
center to be used for conventions, concerts, and other public
events, but considerable controversy surrounds the appropriate
size. Many influential citizens want a large center that would be a
showcase for the area. But the mayor feels that if demand does not
support such a center, the community will lose a large amount of
money. To provide structure for the decision process, the coun- cil
narrowed the building alternatives...
3. Scenario Analysis (LO2) Whitewater Transmissions Inc. has the following estimates for its new gear assembly project: price $1,700 per unit, variable costs $480 per unit; fixed costs = $4.1 million; quantity 95,000 units. Suppose the company believes all of its estimates are accurate only to within +15 percent. What values should the company use for the four variables given here when it performs its best-case scenario analysis? What about the worst- case scenario?
i need 100% fresh and new
answers for both parts
3.1 Perform a scenario analysis on the data provided Case Study: Assume that the company, where you are working as a team in Financial Department, is considering a potential project with a new product that is expected to sell for an average price of $22 per unit and the company expects it can sell 650 000 unit per year at this price for a period of 4 years. Launching this...
Question 6 (of 19) 10.00 points Problem 11-3 Scenario Analysis [LO2 Sloan Transmissions, Inc., has the following estimates for its new gear assembly project price # $3,000 per unit variable costs $800 per unit, fixed costs $1.8 million; quantity 90,000 units. Suppose the company believes all of its estimates are accurate only to within 120 percent. What values should the company use for the four variables given here when it performs its best-case scenario analysis? what about the worst-case scenario?...
What are the best and worst case Variable cost?
You are considering a new product launch. The project will cost $2,075,000, have a four- year life, and have no salvage value; depreciation is straight-line to zero. Sales are projected at 220 units per year; price per unit will be $18,800, variable cost per unit will be $12,350, and fixed costs will be $610,000 per year. The required return on the project is 11 percent, and the relevant tax rate is...
4. Sensitivity and scenario analysis Different techniques for analyzing project risk require different input variables and assumptions. Suppose you are using the scenario analysis technique to evaluate project risk. You would change in the model to evaluate the effect of the input factors on the expected value. Tanya is a risk analyst. She is conducting a sensitivity analysis to evaluate the riskiness of a new project that her company is considering investing in. Her risk analysis report includes the sensitivity...
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