please help to provide detail answer for a b c. Thanks!

It's been four months since you took a position as an assistant at the end ot the profect's five-year Me. The firm also expects financial analyst at Caledonia Products. During that time. you've to heve to invest an acditional \$s.00.000 in working capital had a promotion, and you are now working as a special assistant to support the new business. Other pertinent intormation for capital budgeting, reporting directly to the CEO. Your latest assignment is your first assignment dealing with risk analysis. As a consequence you have been asked not only to provide a recommendation on the project but to respond to a number of questions aimed at judging your understanding of risk analysis and capital budgeting. The memorandum you received outlining your assignment follows: TO. The Special Assistant for Capital Budgeting FAOM: Mr V. Morrison, CEO, Caledonia Products RE: Capital Eudgeting and Risk Analysis Provide a witten response to the foliowing questions: 1. Explain how sensitivity analysis and scenario analysis are In additicri, estimates for unit sales, selling price, variable cost useful tools for evaluating project risk. 2. What are real options? How does the presence of option. case, worst-case, and best-case scenanios are as follows: ally in the investments that firms make cause the tradition. - ally calculated NPV of a proyect to be underestimated? 3. Explain how simulation works. What is the value of using a simulation approach? 4. How can break-even analysis be helpful in evaluating prof ect risk? 5. What is sensitivity analysis. and what is its purpose? 6. Now that management is comforable with your solls, the company would like you to look at a new pruject. This proj. ect involves the purchase of a new $2,000,000 fully atito- a. Estimate the cash flows for the investment undar the listed maled plasma outter that can be used in our metal works. base-case assumptions. Calculate the project NPV for division. The products manulactured using th new technolthese cashin flows, OJy are expected to sell for at average price of scoo ner b. Evaluate the NPV of the investment under the worst-case unit, and tha compary analyst expects that ine fim can se assumptions: The cutter will have a residual or salvage vatue of $200,000 c. Evaluate the NPFV of the investment under the best-case assuniptions