Use the Information Below to Answer the Following Question(s)

question 17

Multiple Choice

Use the information below to answer the following question(s) .
Below is a spreadsheet for Trance Electronics.

Suppose that the project manager of Trance Electronics has identified the following uncertain variables in the model and the distributions and parameters that describe them, as follows:
: normal with mean of 2,000,000 units and standard deviation of 400,000 units.
: uniform between $600,000,000 and $800,000,000.
: lognormal with mean of $150,000,000 and standard deviation $30,000,000.
: triangular with minimum = 2%, maximum = 6%, and most likely = 3%.
: triangular with minimum = 15%, maximum = 25%, and most likely = 20%.
The number of trials per simulation is equal to 10,000 at a Sim.Random Seed of 2.Run the simulation and answer the following questions using the Risk Solver Platform.
-What is the coefficient of variation obtained from the simulation results of the net present value?

• A)1.78392
• B)-2.23958
• C)-1.43288
• D)2.87645

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Definitions:

What-If Questions

Hypothetical questions used to explore the effects of changes in variables or conditions, often used in planning and decision making.

Forecasting Risk

The possibility of error in projecting future values such as revenues, costs, or stock prices, due to uncertainty about future events.

Initial Investment

Refers to the initial capital outlay or amount of money invested to start a project or investment.

IRR

Internal Rate of Return; a financial metric used to estimate the profitability of potential investments, calculated as the discount rate that makes the net present value of all cash flows from a particular project equal to zero.