which of the gollwing methods result in a probability distribution of project NPV outvomrs based on...

which of the gollwing methods result in a probability distribution of project NPV outvomrs based on probability distributiond of project iputs?

a. simuation analysis

b. sensitiy anssysis

c, simulation and sensativity analyisis

d. scenario analysis

e. scenario and sensativity analysis

Solutions

Expert Solution

Typically Monet Carlo simulation is employed to ascertain the probability distribution of Project NPV outcomes based on probability distribution of inputs. However, in fields like economics, Probabilistic sensitivity analysis is carried out to quantify the level of outcome based on the change in inputs.

Answer is c) Simulation and Sensitivity analysis

jeff jeffy answered 2 years ago

Next > < Previous

Related Solutions

7. Which of the following is true when finding the probability based on – sampling distribution?...

7. Which of the following is true when finding the probability based on – sampling distribution? A. Normality is given by BOTH the population being normal and n ≥ 30 B. Normality is given by BOTH np ≥ 5 and nq ≥ 5. C. We have to either add or subtract .5 to the x-value to make our answer more accurate. D. To find the standard error of the mean we take the population standard deviation and divide by the...

1. What is the net present value (NPV) of the project? 2. Based on this NPV,...

1. What is the net present value (NPV) of the project? 2. Based on this NPV, should Hasbro undertake this project? 3. What is the internal rate of return (IRR) of this project? You can find IRR by varying the discount rate in your table until NPV is zero. That new discount rate will be the IRR. Your grade will be based on the completeness of your cash flow table and calculations as well as your answers above. Monopoly expansion...

1. What is the net present value (NPV) of the project? 2. Based on this NPV,...

The following require calculating the probability of the specified event based on an assumed probability distribution....

The following require calculating the probability of the specified event based on an assumed probability distribution. Remember to consider whether the event involves discrete or continuous variables. You are measuring height of vegetation in a grassland using a Robel pole and a 5 m. radius. Based on 100 random samples from the grassland, you obtain a mean height of 0.6 m with a standard deviation of 0.04 m2. a) What distribution is the appropriate reference for this problem? b) Ninety...

Calculate the NPV for each project and determine which project should be accepted. Project A Project...

Calculate the NPV for each project and determine which project should be accepted. Project A Project B Project C Project D Inital Outlay (105,000.000) (99,000.00) (110,000.00) (85,000.00) Inflow year 1 53,000.00 51,000.00 25,000.00 45,000.00 Inflow year 2 50,000.00 47,000.00 55,000.00 50,000.00 Inflow year 3 48,000.00 41,000.00 15,000.00 30,000.00 Inflow year 4 30,000.00 52,000.00 21,000.00 62,000.00 Inflow year 5 35,000.00 40,000.00 35,000.00 68,000.00 Rate 7% 10% 13% 18% Your company is considering three independent projects. Given the following cash flow information,...

Calculate the NPV for each project and determine which project should be accepted. Project A Project...

Calculate the NPV for each project and determine which project should be accepted. Project A Project B Project C Project D Initial Outlay (105,000.00) (99,000.00) (110,000.00) (85,000.00) Inflow year 1 53,000.00 51,000.00 25,000.00 45,000.00 Inflow year 2 50,000.00 47,000.00 55,000.00 50,000.00 Inflow year 3 48,000.00 41,000.00 15,000.00 30,000.00 Inflow year 4 30,000.00 52,000.00 21,000.00 62,000.00 Inflow year 5 35,000.00 40,000.00 35,000.00 68,000.00 Rate 7% 10% 13% 18% NPV = $75,228.32 $77,364.07 -$2,531.00 $69,006.08 Answer: Project B How to show work...

When NPV and IRR rules result in a conflicting decision regarding acceptance of a project managers...

When NPV and IRR rules result in a conflicting decision regarding acceptance of a project managers could use the MIRR. It assumes reinvestment of projects' cash flows at the WACC, so it produces results consistent with NPV method. Let's try to find the MIRR for the project with the following cash flows: Initial cost of -800 at time zero, CF1 = 400, CF 2 = 570, CF3 = -130. Here we have two negative cash flows and two positive cash...

The managers of Tetron Medical Clinic are analyzing a proposed project. The following NPV distribution is...

The managers of Tetron Medical Clinic are analyzing a proposed project. The following NPV distribution is given. Probability NPV 0.05 -$700,000 0.2 -$250,000 0.5 $120,000 0.2 $200,000 0.05 $300,000 a. What is the project's expected NPV and standard deviation of NPV? b. Compute CV? c. What decision is appropriate for this project using NPV, standard deviation and CV? Please show your work.

Which of the following is NOT a characteristic of the normal probability distribution? a....

1. Which of the following is NOT a characteristic of the normal probability distribution? a. The distribution is symmetrical. b. The mean, median, and mode are equal. c. The standard deviation must be 1. d. The mean of the distribution can be negative, zero, or positive. 2. For a standard normal distribution, P(Z 0) is a. Zero b.one D c.0.5 d.HOS

Which of the following is not a characteristic of the normal probability distribution?

Which of the following is not a characteristic of the normal probability distribution? a. symmetry b. The total area under the curve is always equal to 1. c. 99.72% of the time the random variable assumes a value within plus or minus 1 standard deviation of its meand. The mean is equal to the median, which is also equal to the mode.

Subjects