CatchDawg Inc has designed a new tough toy for dogs called the Toughie, which is stronger than any other toy on the market. The company has conducted an extensive market study, costing them $5,000 more than intially planned (i.e. $15,000). The study revealed the following market projections: Revenue resulting from the new product is expected to be $ 717,000 per year and yearly costs to be $ 482,000. The revenue from other products of the company are expected to go up by $34,000/yr, as customers become familiar with the quality of the products. The new product is expected to sell for 8 years, and both the revenues and costs are expected to remain constant. The additional machinery to produce the product will costs $1,423,000 and ATO rules require that the machinery be depreciated to zero over 8 years. At the end of the 8 years, the company expects to be able to sell the machinery for $ 70,000. The project will also require an initial working capital of $10,000, which will be recovered at the end of the project. Assuming a tax rate of 30% and a required return of 8% p.a., what is the expected NPV? Round your answer to two decimals.

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The manager of CatchDawg is aware that the world is uncertain and that every project carries risks. To understand the risks of the project, he hires a consultant to do an in-depth analysis that considers several variables, their distributions and their correlations. The output is a estimated NPV distribution. What type of analysis will the consultant conduct? What does the output tell us about the risk of the project? Explain how this type of analysis is different to one other method of analysing project.