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The managers of Meth Medical Clinic are analyzing a proposed project.
The managers of Meth 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)
0.50 120,000
0.20 200,000
0.05 300,000
Need the project's expected NPV and standard deviation of NPV.
Should the base case analysis use the most likely NPV or expected NPV? Explain your answer.
