Net Present Value (NPV) Risk Analysis

May 13th, 2015
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Risk analysis is the procedure of characterizing and analyzing the dangers of organizations, people, and government agencies posed as a result of possible common and human-caused adverse occasions.

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SU MBA5004 W5 A2 RUNNING HEAD: Risk AnalysisRisk AnalysisJaDonna HarrellManagerial Economics MBA 5004 S03Professor Sabrina SegalFebruary 26, 2015Risk analysis is the procedure of characterizing and analyzing the dangers of organizations, people, and government agencies posed as a result of possible common and human-caused adverse occasions.Project AProject BProbabilityCash FlowExpected ValueCash FlowExpected Value0.2810016205001000.591004550810040500.3105003150165004950Expected Value33203100These expected values represent the cash flow from each project that is at the end of three years after taking into consideration diverse situations. Project AProject BCash FlowsDifferenceSquareCash FlowsDifferenceSquare8100-133.3317776.8889500-7866.676.2E*079100866.67751116.88898100-266.6771112.9105002266.675137792.889165008133.336.6E*07277005906686.667251001.3E*08Mean92333.333Mean8366.66667Standard Deviation2906667/2^1205.54Standard Deviation128106667/2^8003.33Coefficient of Variation0.146Coefficient of Variation0.357This measure shows the degree of variation in the cash flows for each of these proj

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