A. Up-and-Coming Company from above is considering modifications to one of its existing products. As part of the sensitivity analysis, they estimated the NPV of the modifications based on three different levels of unit cost: the base level, Base 10% and Base + 10%. At this time, they consider the three cost levels to be equally likely. The sensitivity chart below is similar to the analysis in section 11-5 of the Chapter 11 Tool Kit on tab 2-Sens.

Production

Deviation

Cost/unit

NPV

from Base

$1.95

$14,296

-10%

$1.76

$19,444

0%

$1.95

$14,296

10%

$2.15

$9,148

Explain the meaning of the NPV values in the right-hand column.