Question
When your companys Onsite Daycare Center opens, your research indicates that its Net Present Value has a 50% chance of being $256,000. This NPV considers
When your companys Onsite Daycare Center opens, your research indicates that its Net Present Value has a 50% chance of being $256,000. This NPV considers the present value of a decrease in employee turnover due to having an onsite childcare option minus the present value of costs to build, staff and administer the center, as well as the annual depreciation on the building and equipment over the projects term.
But the daycare center also has a 50% chance of a net present value of -$102,000.
Given the possible outcomes and their probabilities, what is the expected value of the Net Present Value for the Onsite Daycare Center project?
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