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stuck on this question pls help me Different techniques for analyzing project risk require different input variables and assumptions The procedure in which one of
stuck on this question pls help me
Different techniques for analyzing project risk require different input variables and assumptions The procedure in which one of the elements (or variables) affecting a projects expected value is changed to study its effect on the expected value is called sensitivity analysis sensitivity yst. She is conducting a sensitivity analysis to evaluate the riskiness of a new project that her com is considering investing in Her i scenario port includes the sensitivity curve shown on the graph. Kathy Base Case NPV Millions of dollars) Kathy 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, O Base Case NPV NPV (Millions of dollars) Base Case Units Sold -20 -15 -10 -5 0 5 30 15 20 CHANGES IN UNITS SOLD (Percent) This curve implies that the project is very sensitive to changes in units sold. The project's NPV is likely to become negative if the number of units sold Along with the sensitivity analysis, Kathy 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 Outcome Data Collected NPV Probability (P) -$5.62 million 0.35 $7.94 million 0.30 Pessimistic Most likely Optimistic $16.45 million 0.35 Z Probability Data for 0.03 0.06 0.09 0.1515 0.1446 0.1379 -1.0 -0.8 0.2033 0.1949 0.1867 -0.6 0.2643 0.2546 0.2451 -0.4 0.3336 0.3228 0.3121 Complete the missing information in Kathy's report: (Note: Round your answers to two decimal places.) The expected net present value of the project is $6.17 million Standard deviation of the net present value (the NPV of the project is likely to vary by) $ 9.30 million Assuming that probability distribution is normal, the value of zis -0.83 Thus, the project has a 31.21% chance to generate an NPV of less than $0 Step by Step Solution
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