Excel company plans to launch a new product line in the year 2020 so as to increase its market share. The initial investment is expected to be sh. 3M with nil salvage value. The life of the product is estimated to be 6 years. However, there is uncertainty about the selling price, variable cost and quantity to be sold due to the prevailing market conditions. The estimated probabilities are given below:

selling price probabilities

sh. 1,000 0.2

1,500 0.4

2,000 0.4

Variable cost

800 0.1

1,200 0.6

900 0.3

Sales volume

12,000 0.3

10,000 0.4

14,000 0.3

Using the following random numbers, simulate the problem to determine the range of NPVs, and Expected NPV. Assume a tax rate of 30% and cost of capital of 12%.

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