Problem 2

The expected costs and revenues for a project are shown below. The investment cost could be

off by ±30%. The operating costs could be off by ±5%, and the revenue could be off by ±15%.

Determine the NPV for both the best-case scenario and the worst-case scenario.

Year

Investment

Operating Cost

Revenue

0

(2,000)

1

(1,400)

(1,000)

2,000

2

(800)

2,000

3

(800)

2,000

4

(800)

2,000

5

(800)

2,000