Question: Information about the cash ows for a four - year nancial project are listed in the following table. The cash ows are assumed to follow

Information about the cash ows for a four - year nancial project are listed in the following table. The cash ows are assumed to follow a triangular distribution. The cost of implementing the project is expected to be between $20,000 and $90,000, with all values in this range being equally likely. Analysis of changes in the Consumer Price Index suggests that the annual rate of ination can be approximated with a normal distribution with a mean of 4 percent and standard deviation of 3percent. The organizations required rate of return is18percent. Develop a model in @Risk to analyze this situation and answer the following questions (use 10,000 iterations).
Year
Minimum flow
Most likely inflow
Maximum inflow
1
$ 15,000
$ 20,000
$ 30,000
2
$ 20,000
$ 25,000
$ 35,000
3
$ 20,000
$ 30,000
$ 35,000
4
$ 40,000
$ 50,000
$ 60,000
What is the expected NPV of this project?
What is the range of the NPVs?(Minimum and maximum values)
How would you characterize the level of risk with this project?
Would you recommend undertaking this project? Why or why not?

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