Question

The managers of Hewlett Medical Clinic are analyzing a proposed project. The project's most likely NPV...

The managers of Hewlett Medical Clinic are analyzing a proposed project. The project's most likely NPV is $130,000, but as evidenced by the following NPV distribution, there is considerable risk involved:

Probability NPV
0.05 ($800,000)
0.20 (250,000)
0.50 130,000
0.20 200,000
0.05 400,000

What is the project's standard deviation of NPV?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
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: Economic Scenario Probability of Outcome NPV Recession 0.05 -$76 million     Below average 0.20 -28 million    ...
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: Economic Scenario Probability of Outcome NPV Recession 0.05 -$72 million     Below average 0.20 -18 million    ...
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: Economic Scenario Probability of Outcome NPV Recession 0.05 -$74 million     Below average 0.20 -12 million    ...
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: Economic Scenario Probability of Outcome         NPV Recession 0.05 -$68 million     Below average 0.20 -18 million    ...
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: Economic Scenario Probability of Outcome NPV Recession 0.05 -$76 million     Below average 0.20 -12 million    ...
Huang Industries is considering a proposed project whose estimated NPV is $12 million. This estimate assumes...
Huang Industries is considering a proposed project whose estimated NPV is $12 million. This estimate assumes that economic conditions will be "average." However, the CFO realizes that conditions could be better or worse, so she performed a scenario analysis and obtained these results: Economic Scenario Probability of Outcome NPV Recession 0.05 ($48 million) Below average 0.20 (16 million) Average 0.50 12 million Above average 0.20 24 million Boom 0.05 28 million Calculate the project's expected NPV, standard deviation, and coefficient...
Huang Industries is considering a proposed project whose estimated NPV is $12 million. This estimate assumes...
Huang Industries is considering a proposed project whose estimated NPV is $12 million. This estimate assumes that economic conditions will be "average." However, the CFO realizes that conditions could be better or worse, so she performed a scenario analysis and obtained these results: Economic Scenario Probability of Outcome NPV Recession 0.05 ($46 million) Below average 0.20 (26 million) Average 0.50 12 million Above average 0.20 14 million Boom 0.05 32 million Calculate the project's expected NPV, standard deviation, and coefficient...
Huang Industries is considering a proposed project whose estimated NPV is $12 million. This estimate assumes...
Huang Industries is considering a proposed project whose estimated NPV is $12 million. This estimate assumes that economic conditions will be "average." However, the CFO realizes that conditions could be better or worse, so she performed a scenario analysis and obtained these results: Economic Scenario Probability of Outcome NPV Recession 0.05 ($90 million) Below average 0.20 (24 million) Average 0.50 12 million Above average 0.20 14 million Boom 0.05 40 million Calculate the project's expected NPV, standard deviation, and coefficient...
Huang Industries is considering a proposed project whose estimated NPV is $12 million. This estimate assumes...
Huang Industries is considering a proposed project whose estimated NPV is $12 million. This estimate assumes that economic conditions will be "average." However, the CFO realizes that conditions could be better or worse, so she performed a scenario analysis and obtained these results: Economic Scenario   Probability of Outcome   NPV Recession   0.05   ($42 million) Below average   0.20   (24 million) Average   0.50   12 million Above average   0.20   14 million Boom   0.05   38 million Calculate the project's expected NPV, standard deviation, and coefficient...
Huang Industries is considering a proposed project whose estimated NPV is $12 million. This estimate assumes...
Huang Industries is considering a proposed project whose estimated NPV is $12 million. This estimate assumes that economic conditions will be "average." However, the CFO realizes that conditions could be better or worse, so she performed a scenario analysis and obtained these results: Economic Scenario Probability of Outcome NPV Recession 0.05 ($34 million) Below average 0.20 (16 million) Average 0.50 12 million Above average 0.20 16 million Boom 0.05 38 million Calculate the project's expected NPV, standard deviation, and coefficient...