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(please show formulas) Now conduct a scenario analysis. Assume that there is a 25% probability that best-case conditions, with each of the variables discussed in
(please show formulas) Now conduct a scenario analysis. Assume that there is a 25% probability that best-case conditions, with each of the variables discussed in Part b being 20% better than its base-case value, will occur. There is a 25% probability of worst-case conditions, with the variables 20% worse than base, and a 50% probability of base-case conditions.
Sales | Unit | Variable | ||||
Scenario | Probability | Price | Sales | Costs | NPV | |
Best Case | 25% | $28.80 | 1,200 | $14.00 | ||
Base Case | 50% | $24.00 | 1,000 | $17.50 | ||
Worst Case | 25% | $19.20 | 800 | $21.00 | ||
Expected NPV = | ||||||
Standard Deviation = | ||||||
Coefficient of Variation = Std Dev / Expected NPV = |
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