Shao Industries is considering a proposed project for its capital budget. The company estimates the project!will be average over the next few years. The company's CFO, however, forecasts there is only a 50% chance that the economy will be average. Recognizing this uncertainty, she has alsoperformed the following scenario analysis:Economic ScenarioProbability of OutcomeRecessionBelow average0.05NPV-$58 million0.20-18 millionAverageAbove averageBoom0.5012 million0.2016 million0.0534 millionWhat are the project's expected NPV, standard deviation, and coefficient of variation? Enter your answers for the NPV and standard deviation in millions. For example, an answer of $1.24 millionshould be entered as 1.24, not 1,240,000. Do not round intermediate calculations. Round your answers to two decimal places.E(NPV):$ONPV:$millionmillionCVNPV:

Name: Shao Industries is considering a proposed project for its capital bud
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Description: Shao Industries is considering a proposed project for its capital budget. The company estimates the project!will be average over the next few years. The company's CFO, however, forecasts there is only a 50% chance that the economy will be average. R

It is difficult to arrive at a single accurate figure of the NPV as it is affected by many factors.…

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Shao Industries is considering a proposed project for its capital budget. The company estimates the projects fr will be average over the next few years. The company's CFO, however, forecasts there is only a 50% chance that the economy will be average. Recognizing this uncertainty, she has also performed the following scenario analysis: Economic Scenario Recession Probability of Outcome NPV 0.05 -$58 million Below average Average 0.20 -18 million 0.50 12 million Above average Boom 0.20 16 million 0.05 34 million What are the project's expected NPV, standard deviation, and coefficient of variation? Enter your answers for the NPV and standard deviation in millions. For example, an answer of $1.24 million should be entered as 1.24, not 1,240,000. Do not round intermediate calculations. Round your answers to two decimal places. E(NPV): $ $ million million ONPV CVNPV

Shao Industries is considering a proposed project for its capital budget. The company estimates the projects fr will be average over the next few years. The company's CFO, however, forecasts there is only a 50% chance that the economy will be average. Recognizing this uncertainty, she has also performed the following scenario analysis: Economic Scenario Recession Probability of Outcome NPV 0.05 -$58 million Below average Average 0.20 -18 million 0.50 12 million Above average Boom 0.20 16 million 0.05 34 million What are the project's expected NPV, standard deviation, and coefficient of variation? Enter your answers for the NPV and standard deviation in millions. For example, an answer of $1.24 million should be entered as 1.24, not 1,240,000. Do not round intermediate calculations. Round your answers to two decimal places. E(NPV): $ $ million million ONPV CVNPV

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter13: Capital Budgeting: Estimating Cash Flows And Analyzing Risk

Section: Chapter Questions

Problem 11P: Scenario Analysis Shao Industries is considering a proposed project for its capital budget. The...

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