SCENARIO ANALYSIS 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 ($70 million)

Below average 0.20 (25 million)

Average 0.50 12 million Above average 0.20 20 million Boom 0.05 30 million Calculate the project’s expected NPV, standard deviation, and coefficient of variation.

AppendixLO1