Question: Suppose the CFO wants you to do a scenario analysis with different values for the cost savings, the machine's salvage value, and the net operating working capital (NOWC) requirement. She asks you to use the following probabilities and values in the scenario analysis:
| Scenario |
Probability |
Cost Savings |
Salvage Value |
NOWC |
| Worst case |
0.35 |
$72,000 |
$17,000 |
$26,000 |
| Base case |
0.35 |
$90,000 |
$22,000 |
$21,000 |
| Best case |
0.30 |
$108,000 |
$27,000 |
$16,000 |
Calculate the project's expected NPV, its standard deviation, and its coefficient of variation. Round your answers to two decimal places.
E(NPV) = $
sNPV = $
CV =
Would you recommend that the project be accepted?