a)Think about changes that happen in a project once it has been accepted and moving forward. Here are 3 potential scenarios. For each, describe what you expect to happen to the project's expected NPV, and WHY that is your expectation.  

i.Your workforce voted in a new union, raising wages for most line-workers. There has been no change in your product pricing or other expenses/revenue projections.

ii.Once construction began on the project, a rare black-footed ferret was found nearby. Environmental groups have demanded that the project halt operations for 9 months while the ferrets are found and relocated. Once the ferrets were moved, operations continued as originally planned, but with all cash flows shifted out by 9 months.

iii.Due to a (lucky) miscalculation by the marketing folks, demand for your project's products has increased in the early years of the project, but that "stole" sales from future years. The same total inflows were achieved, but the timing was more front-loaded than anticipated.

Answer rating: 100% (QA)

When evaluating the impact of changes on a projects expected Net Present Value NPV its essential to consider how these changes affect both the timing ... View the full answer