The managers of U S Rubber have analyzed a proposed investment project The expected net present value (NPV) of the project, evaluated at the firms weighted cost of capital of 18 percent, has been estimated to be $100,000 The companys managers have determined that the most optimistic NPV estimate of...

Expected value 100000 Most optimistic estimate 175000 Most pessimisti ...

The managers of U.S. Rubber have analyzed a proposed investment project. The expected net present value (NPV)

Question:

The managers of U.S. Rubber have analyzed a proposed investment project. The expected (NPV) of the project, evaluated at the firm’s weighted of 18 percent, has been estimated to be $100,000. The company’s managers have determined that the most optimistic NPV estimate of the project is $175,000 and the most pessimistic estimate is $25,000. The most optimistic estimate is a value that is not expected to be exceeded more than 10 percent of the time. The most pessimistic estimate represents a value that the project’s NPV is not expected to fall below more than 10 percent of the time. What is the probability that this project will have a negative NPV?

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...