Using your NPV Values from the Most Likely, Best and Worst Case Worksheet from Week 4 Excel Homework and the following Information, Calculate this projects risk by completing all yellow fields

Project Risk Adjustment Table

Probability

NPV

Weighted NPV

CV

Adjustment basis points to cost of capital

Worst Case

20%

<2.0

0

2.0 to 2.25

50

Most Likely Case

60%

2.25-2.5

75

2.5-3.0

100

Best Case

20%

>3.0

200

Expected NPV--Be sure to show your work

Standard Deviation---Be sure to show your work

Coefficient of Variation (CV)--- Be sure to show your work

Using CV risk table at upper right, should we increase our Cost of Capital from the baseline value of 8%?? If so, what would our new cost of Capital be?

What Management Actions Can we take to Mitigate Price Per Unit Sensitivity?

What Management Actions Can we take to Mitigate Salvage Value Sensitivity?

What Management Actions Can we take to Mitigate Volume Sensitivity?