The financial manager of Infinity Plc has estimated the Net Present Value (NPV) of an investment project to be £25 million under the assumption that the cash flows associated with the project are normally distributed. Assume that the annual standard deviation is £0.853 million and that the standardized value associated with the 95% confidence level is 1.65.

Required: Critically assess/evaluate/discuss the value at risk of the project’s NPV if its life span is 5 years, assuming a 95% confidence level.

Answer rating: 100% (QA)

When the time period increase by a factor of 5 t... View the full answer