Q.3: Scenario Analysis CGH corporation is analyzing a new water treatment project. The new water treatment would increase yield and will be implemented under a 4-year license. However, is it not clear whether the project will add value and increase cash flow to the corporation. The project cash flow and probabilities of each scenario is given in the table below. Given that the project WACC equals to 10% and average project coefficient of variation of the company is 3.5. Should the water treatment project be implemented? Why? Scenario Probability CFO CF1 CF2 CF3 CF4 Basic 0.5 -4765.325 908 1220.466 873.60197 2158.534 Worst 0.25 -4719.062 (554) -391.6046 -943.7799 -528.661 Best 0.25 -3768.448 2,953 3630.378 3971.7684 7053.124