Question
1.A project has an expected net present value of $40,000 with a standard deviation of the net present value of $30,000. Assume that NPV is
1.A project has an expected net present value of $40,000 with a standard deviation of the net present value of $30,000. Assume that NPV is normally distributed.
(a) What is the probability that the project will have a negative NPV?
(b) If the level of tolerance for the project having a negative NPV is 5%, would this project be considered acceptable? Explain why or why not?
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Gapenski's Healthcare Finance An Introduction To Accounting And Financial Management
Authors: Kristin L. Reiter, Paula H. Song
7th Edition
1640551867, 9781640551862
