Different techniques for analyzing project risk require different input variables and assumptions.

The procedure in which a set of key elements affecting the expected value are changed to study the effect on the expected value is calledsensitivity analysis.

Elle is a risk analyst. She is conducting a sensitivity analysis to evaluate the riskiness of a new project that her company is considering investing in$.$ Her risk analysis report includes the sensitivity curve shown on the graph.

$0$

$3$

$6$

$9$

$12$

$15$

NPV $($Millions of dollars$)$

COST OF CAPITAL $($Percent$)$

Base Case NPV

Base Case Cost of Capital

This curve implies that the project is not very sensitive to changes in cost of capital. The project$$s NPV is likely to if the cost of capital increases to $15\%.$

Along with the sensitivity analysis, Elle is including a scenario analysis for the project in her report, giving the probability of the project generating a negative NPV$.$ Her report includes the following information about the scenario analysis:

Data Collected

Outcome NPVj

Probability $($Pj

$)$

Pessimistic $$$$5\mathrm{.}62$ million $0\mathrm{.}35$

Most likely $$7\mathrm{.}94$ million $0\mathrm{.}30$

Optimistic $$16\mathrm{.}45$ million $0\mathrm{.}35$

Probability Data for z

z $0\mathrm{.}030\mathrm{.}060\mathrm{.}09$

$-1\mathrm{.}00\mathrm{.}15150\mathrm{.}14460\mathrm{.}1379$

$-0\mathrm{.}80\mathrm{.}20330\mathrm{.}19490\mathrm{.}1867$

$-0\mathrm{.}60\mathrm{.}26430\mathrm{.}25460\mathrm{.}2451$

$-0\mathrm{.}40\mathrm{.}33360\mathrm{.}32280\mathrm{.}3121$

Complete the missing information in Elle$$s report: $($Note: Round your answers to two decimal places.$)$

The expected net present value of the project is $.$

Standard deviation of the net present value $($the NPV of the project is likely to vary by$)$ $ million.

Assuming that probability distribution is normal, the value of z is $.$

Thus, the project has a chance to generate an NPV of less than $$0.$