A company is considering a franchise expansion project. It plans to estimate the project's net present value (NPV) to decide whether or not it should expand.

Below are 3 cases for the 6 different variables that affect the project's NPV:

You are given:

The project has a finite time horizon and no shutdown costs. When the project expires, all cash flows cease.

All six variables are mutually independent.

The probability that the worst case occurs is 25%, the probability that the base case occurs is 50%, and the probability that the best case occurs is 25%. Also, assume these probabilities are the same across all 6 input variables.

Use the following 6 uniform random numbers u between 0 and 1 to simulate a value for

each of the 6 variables (in order from the 1st row of the table down to the 6th row):

0.0277 0.1198 0.1724 0.4757 0.9617 0.1600

If, pull from the worst-case column. 0u<0.25

If, pull from the base-case column. 0.25u<0.75

If, pull from the best-case column. u<0.751

Based on the simulated values, calculate the NPV for the project.