278 Part Three Best Practices in Capital Budgeting
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“Hey, this might be fun,” George exclaimed to Mr. Waldo’s secretary, Fifi, who was heading
for Old Orchard Beach for the weekend. “I might even try Monte Carlo.”
“Waldo went to Monte Carlo once,” Fifi replied. “Lost a bundle at the roulette table. I
wouldn’t remind him. Just show him the bottom line. Will it make money or lose money? That’s
the bottom line.”
“OK, no Monte Carlo,” George agreed. But he realized that building a spreadsheet and run-
ning scenarios was not enough. He had to figure out how to summarize and present his results to
Mr. County.QUESTIONS- What is the project’s NPV, given the projections in Table 10.8?
- Conduct a sensitivity and a scenario analysis of the project. What do these analyses reveal
about the project’s risks and potential value?