Think about changes that happen in a project once it has been accepted and moving forward. Here are 3 potential scenarios. For each, describe what you expect to happen to a project's expected NPV, and WHY that is your expectation. (2 pts for each of the following).

As MBA students, just being able to calculate NPV isnt sufficient. You should be able to consider what the effects of various market or project changes on the projects viability.

LOOK AT EACH SITUATION INDIVIDUALLY AND ASSUME THAT THERE ARE NO OTHER CHANGES FOR THE FIRM.

Two years ago, when the original cash flow projections were prepared for one of your companys projects it was assumed that the needed equipment upgrades in year 2 would cost $2mm and with inflation and technology problems, this cost has been revised to $2.8mm.