Text book problems: Chapter 12 Problem 12-7 page 28 Fundamentals of Financial Management 14th Edition

Scenario Analysis. Huang Industries is considering a proposed project whose estimated NPV is $12 million. This estimate assumes that economic conditions will be "average". However, the CFO realizes that conditions could be better or worse , so she perfomed a scenario analysis and obtained these results:

Economic Scenario Probability of outcome NPV

Recession 0.05 ($70 million)

Below average 0.20 ($25 million)

Average 0.50 12 million

Above average 0.20 20 million

Boom 0.05 30 million

Calculate the project`s expected NPV, standard deviation, and coefficient of variation.