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As the financial controller of Minimum Risk Inc., you have computed the NPV of a project to be $15 million, using expected cash flows and
As the financial controller of Minimum Risk Inc., you have computed the NPV of a project to be $15 million, using expected cash flows and a riskadjusted discount rate. You are, however, concerned that you may have made errors in estimating the cash flows and the discount rate. Which of the following make you feel more comfortable with taking the project, given this fear?
Question 5 options:
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a) | In your worst-case scenario, the project has a NPV of $1.5 million |
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b) | The project has a long payback period |
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c) | The standard deviation in the NPV, when you do a Monte Carlo simulation yields a high value |
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d) | The project NPV is very sensitive to changes in your discount rate |
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e) | In your best-case scenario, the project has a NPV of $75 million |
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