Question: c) Think about changes that happen in a project once it has been accepted and moving forward. Here are 3 potential scenarios. For each, describe
c) 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 a project's expected NPV, and WHY that is your expectation. (2 pts for cach of the following). As MBA students, just being able to calculate NPV isn't sufficient. You should be able to consider what the effects of various market or project changes on the project's viability LOOK AT EACH SITUATION INDIVIDUALLY AND ASSUME THAT THERE ARE NO OTHER CHANGES FOR THE FIRM i. There has been a recent change in environmental regulations that now requires extensive waste cleanup for your firm's latest project during its final year (5 years from now). These cleanup costs were not anticipated when the project was analyzed and accepted 4 years ago. ii. Unexpected inflation has increased the price of raw materials for your firm. Unfortunately, your firm's outstanding contracts do not have any protection clauses for unforeseen issues such as this, it is committed to providing delivery as specified in the original contracts, at the original pricing
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
