Question: Foxglove Corp. encounters significant uncertainty with its sales volume & rates in its primary product. The firm uses scenario analysis in order to estimate an expected NPV, which it then uses in its budget. The base case, best case, & worse case scenarios and probabilities are provided in the table. Determine Foxglove Corp. expected NPV, standard deviation of NPV, & coefficient of variation of NPV?
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Probability of Outcome
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Unit Sales (Volume)
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Sales Price
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NPV (In Thousands)
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Worst case
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0.3
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6,000
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$3,600
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($6,000)
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|
Base case
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0.5
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10,000
|
4,200
|
13,000
|
|
Best case
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0.2
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13,000
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4,400
|
28,000
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