The managers of Merton Medical Clinic are analyzing a proposed project. The project's most likely NPV is $120,000, but, as evidenced by the following NPV distribution, there is considerable risk involved:

Probability NPV

0.05($700,000)

0.20(250,000)

0.50120,000

0.20200,000

0.05300,000

(a) I need the project's expected NPV and standard deviation of NPV?

(b) Should the base case analysis use the most likely NPV or expected NPV? Explain your answer.