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budgeting
Risk
It is the projects
independently.
total
risk
if
it
were
operated
Within-firm risk
Market risk
Stand-alone risk
SD Of NPV
Coefficient of variation of NPV
Sensitivity analysis
Scenario analysis
Scenario analysis
Best Case
25% 1600
$240 278,965
Base Case 50% 1250
$200 88,030
Worst Case 25% 900
$160 (48,514)
NPV
Simulation analysis
The uncertain cash flow variables (such as unit sales) are entered
as continuous probability distribution parameters rather than as
point values.
Simulation analysis
OTHERS RISK
Harmful lawsuits
Thanks
Real options