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problem: Foxglove Corp. encounters significant uncertainty with its sales volume & rates in its primary product. The firm uses scenario analysis in order to estimate an expected NPV, which it then uses in its budget. The base case, best case, & worse case scenarios and probabilities are provided in the table. Determine Foxglove Corp. expected NPV, standard deviation of NPV, & coefficient of variation of NPV?

 

Probability  of Outcome  

Unit Sales (Volume)

Sales Price 

 NPV (In Thousands)

Worst case

0.3

6,000

$3,600

($6,000)

Base case

0.5

10,000

4,200

13,000

Best case 

0.2

13,000

4,400

28,000

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M918159

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