Response to the following problem:
You are at your desk at work when a co worker excitedly comes to your desk and shows you the scenario analysis that he has just completed for a potential new project. All three scenarios show a positive NPV. He states, "we have to take this project!".
What is your initial reaction regarding this new project. Do you believe the results of the scenario analysis?
What is the risk of assuming he is correct if he is wrong? What is the risk of assuming he is wrong if he is correct?