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Granby Dialysis is considering an expansion project with the projected cash flows Year Worst Case Most Likely Case Best Case 0 ( 1 2 5

Granby Dialysis is considering an expansion project with the projected cash flows
Year Worst Case Most Likely Case Best Case
0(125,000)(100,000)(91,350)
122,00034,50043,000
224,00029,75043,500
326,50033,60044,250
427,30038,00046,000
529,75043,65048,250
Granby Dialysis has a 11.5 percent corporate cost of capital. The probabilities of seeing the worst case, most likely case, and best case are 25%,50% and 25% respectively.
a) What is the projects NPV, IRR, and payback for each case? (10)
b) What is the projects expected NPV?(5)
c) What is the projects standard deviation of NPV?(5)
d) What is the projects coefficient of variation (CV)?(5)
e) Describe how you could adjust this project based on its risk classification? (i.e. if it was above average risk or if it was below average risk)(5)

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