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A.) What is NPV in the base case scenario? What does the base casemrepresent? B.) What is NPV in the worst case scenario? The best
A.) What is NPV in the base case scenario? What does the base casemrepresent? B.) What is NPV in the worst case scenario? The best case scenario? C.) Assume the probability of each scenario is equal. What is the average NPV? D.) Provide a graph evaluating NPV in the base case with different starting prices. E.)Provide a graph evaluating NPV in the base case with different starting yields. F.) What is the breakeven starting price in the base case? Breakeven starting yield? | ||||||
| Cost (per unit) | $4.00 | ||||
Initial Investment | $2,000.00 | ignore depreciation | ||||
Required rate of return | 10.00% | |||||
Base case | Worst case | Best case | ||||
Starting price (per unit) | $10.00 | $6.00 | $15.00 | |||
Starting yield (quantity) | 100 | 70 | 150 | |||
Base case | Price | Yield | Revenue | Cost | Net | |
Year 0 | 0 | 0 | ? | ? | ? | |
Year 1 | $10.00 | 100 | ? | ? | ? | |
Year 2 | $9.50 | 110 | ? | ? | ? | |
Year 3 | $9.00 | 121 | ? | ? | ? | |
Worst case | Price | Yield | Revenue | Cost | Net | |
Year 0 | 0 | 0 | ? | ? | ? | |
Year 1 | $6.00 | 70 | ? | ? | ? | |
Year 2 | $5.50 | 77 | ? | ? | ? | |
Year 3 | $5.00 | 84.7 | ? | ? | ? | |
Best case | Price | Yield | Revenue | Cost | Net | |
Year 0 | 0 | 0 | ? | ? | ? | |
Year 1 | $15.00 | 150 | ? | ? | ? | |
Year 2 | $14.50 | 165 | ? | ? | ? | |
Year 3 | $14.00 | 181.5 | ? | ? | ? | |
Average NPV | Base case NPV | Worst case NPV | Best case NPV | |||
? | ? | ? | ? |
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