Question
Calculate the NPV based on the scenarios in the table below: Scenario Boom Average Weak Bust Probability 0.15 0.40 0.35 0.10 Units Sold 1,000 750
Calculate the NPV based on the scenarios in the table below:
Scenario | Boom | Average | Weak | Bust |
Probability | 0.15 | 0.40 | 0.35 | 0.10 |
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Units Sold | 1,000 | 750 | 500 | 250 |
Unit Selling Price | $11 | $10 | $8 | $5 |
Revenue | ______ | ______ | ______ | ______ |
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Variable Cost % of Revenue | 55% | 50% | 45% | 30% |
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Variable Cost | ______ | ______ | ______ | ______ |
Fixed Cost | 1,000 | 1,000 | 1,000 | 1,000 |
Total Cost |
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Profit (Loss) = A | ______ | ______ | ______ | ______ |
NPV Factor = B | 3.25 | 3.25 | 3.25 | 3.25 |
NPV = A * B = | ______ | ______ | ______ | ______ |
Notes: 1. You do not need a discount rate because it is part of the NPV factor.
2. You will need to fill in the blanks in order to do this calculation.
NPV = __________
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