Option 1 - 12% or 8%

Option 2 - 5.8 million, 1.03 million, 1.93 million and 2.66 million

Option 3 - $5.30, $6.16, $7.13 and $6.56

Different techniques for analyzing project risk require different input variables and assumptions. The procedure in which one of the elements (or variables) affecting a project's expected value is changed to study its effect on the expected value is called sensitivity anlysis Danielle is a risk analyst. She is conducting a sensitivity analysis to evaluate the riskiness of a new project that her company is considering investing in. Her risk analysis report includes the sensitivity curve shown on the graph Base Case NPV Base Case Price 6 12 -30 -24 -18 12 -6 18 24 30 CHANGES IN SELLING PRICE (Percent) NPV(Millions of dollars) This curve implies that the project is very sensitive to changes in the price of the product. The project's NPV is likely to become negative if the price for which the product can be sold decreases by Along with the sensitivity analysis, Danielle is including a scenario analysis for the project in her report, giving the probability of the project generating a negative NPV. Her report includes the following information about the scenario analysis: Data Collected Probability (P) Outcome NPV -$3.50 million Pessimistic 0.20 Most likely $5.62 million 0.45 $11.34 million Optimistic 0.35 Complete the missing information in Danielle's report The expected net present value of the project is Standard deviation of the net present value (the NPV of the project is likely to vary by) million. Different techniques for analyzing project risk require different input variables and assumptions. The procedure in which one of the elements (or variables) affecting a project's expected value is changed to study its effect on the expected value is called sensitivity anlysis Danielle is a risk analyst. She is conducting a sensitivity analysis to evaluate the riskiness of a new project that her company is considering investing in. Her risk analysis report includes the sensitivity curve shown on the graph Base Case NPV Base Case Price 6 12 -30 -24 -18 12 -6 18 24 30 CHANGES IN SELLING PRICE (Percent) NPV(Millions of dollars) This curve implies that the project is very sensitive to changes in the price of the product. The project's NPV is likely to become negative if the price for which the product can be sold decreases by Along with the sensitivity analysis, Danielle is including a scenario analysis for the project in her report, giving the probability of the project generating a negative NPV. Her report includes the following information about the scenario analysis: Data Collected Probability (P) Outcome NPV -$3.50 million Pessimistic 0.20 Most likely $5.62 million 0.45 $11.34 million Optimistic 0.35 Complete the missing information in Danielle's report The expected net present value of the project is Standard deviation of the net present value (the NPV of the project is likely to vary by) million