Question: A.) What is NPV in the base case scenario? What does the base casemrepresent? B.) What is NPV in the worst case scenario? The best

A.) What is NPV in the base case scenario? What does the base casemrepresent?

B.) What is NPV in the worst case scenario? The best case scenario?

C.) Assume the probability of each scenario is equal. What is the average NPV?

D.) Provide a graph evaluating NPV in the base case with different starting prices.

E.)Provide a graph evaluating NPV in the base case with different starting yields.

F.) What is the breakeven starting price in the base case? Breakeven starting yield?

Cost (per unit) $4.00
Initial Investment $2,000.00 ignore depreciation
Required rate of return 10.00%
Base case Worst case Best case
Starting price (per unit) $10.00 $6.00 $15.00
Starting yield (quantity) 100 70 150
Base case Price Yield Revenue Cost Net
Year 0 0 0 ? ? ?
Year 1 $10.00 100 ? ? ?
Year 2 $9.50 110 ? ? ?
Year 3 $9.00 121 ? ? ?
Worst case Price Yield Revenue Cost Net
Year 0 0 0 ? ? ?
Year 1 $6.00 70 ? ? ?
Year 2 $5.50 77 ? ? ?
Year 3 $5.00 84.7 ? ? ?
Best case Price Yield Revenue Cost Net
Year 0 0 0 ? ? ?
Year 1 $15.00 150 ? ? ?
Year 2 $14.50 165 ? ? ?
Year 3 $14.00 181.5 ? ? ?
Average NPV Base case NPV Worst case NPV Best case NPV
? ? ? ?

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