Adjo has determined that the coefficient of variation for

Question

The basic problem statement remains unchanged from problem 1. ADJO has determined that the coefficient of variation for its typi- cal project is 0.63. Use the data in Table 12.8 to perform a scenario analysis for the ADJO sofa product.

How does this change affect decisions within the universe of discourse?

Table 12.6: ADJO Expected Furniture Project Cash   Flows

Year	Futons	Mattresses	Sofas	Chairs	Tables
0	($122,295.33)	($110,263.44)	($118,171.22)	($106,532.78)	($126,358.45)
1	$15,295.33	$18,222.00	$20,488.00	$15,688.00	$20,465.00
2	$15,689.44	$19,575.22	$20,989.00	$16,545.00	$20,877.00
3	$16,887.22	$21,898.27	$22,772.00	$18,200.00	$22,262.00
4	$18,605.47	$22,842.00	$23,545.00	$18,623.00	$23,753.00
5	$20,223.22	$23,223.00	$25,333.22	$19,363.00	$25,222.33
6	$22,565.27	$24,588.62	$27,121.00	$20,222.00	$25,989.24
7	$25,323.22	$25,000.00	$28,656.22	$21,323.00	$26,555.14

Table 12.7: Altered Mattresses Cash Flows

Year	Futons	Mattresses	Sofas	Chairs	Tables
0	($122,295.33)	($127,263.44)	($118,171.22)	($106,532.78)	($126,358.45)
1	$15,295.33	$23,222.00	$20,488.00	$15,688.00	$20,465.00
2	$15,689.44	$23,575.22	$20,989.00	$16,545.00	$20,877.00
3	$16,887.22	$25,898.27	$22,772.00	$18,200.00	$22,262.00
4	$18,605.47	$25,842.00	$23,545.00	$18,623.00	$23,753.00
5	$20,223.22	$27,223.00	$25,333.22	$19,363.00	$25,222.33
6	$22,565.27	$29,588.62	$27,121.00	$20,222.00	$25,989.24
7	$25,323.22	$33,000.00	$28,656.22	$21,323.00	$26,555.14

© 2010 Taylor & Francis Group, LLC

Table 12.8: ADJO Expected Sofa Project Cash  Flows

Year	Worst Case	Most Likely Case	Best Case
0	($118,171.22)	($118,171.22)	($118,171.22)
1	$18,222.00	$20,488.00	$25,688.00
2	$19,575.22	$20,989.00	$26,545.00
3	$21,898.27	$22,772.00	$28,200.00
4	$22,842.00	$23,545.00	$29,623.00
5	$23,223.00	$25,333.22	$30,363.00
6	$24,588.62	$27,121.00	$31,222.00
7	$25,000.00	$28,656.22	$32,323.00