Natick Nurseries Has Used Scenario Analysis to Evaluate the Purchase

question 29

Multiple Choice

Natick Nurseries has used scenario analysis to evaluate the purchase of a former dairy to use for nursery stock. The best case scenario produced a very favorable NPV of $4,000,000; the NPV of the most likely case was $2,000,000, but the worst case scenario resulted in an NPV of $(3,000,000) which would bring the company close to bankruptcy. Natick could improve its decision by

• A) using sensitivity analysis.
• B) using simulation analysis.
• C) simply accepting the best case scenario and rejecting the other outcomes.
• D) weighting the favorable scenarios more heavily to increase the expected NPV.

---

Definitions:

Identity Crisis

A period of uncertainty and confusion in which a person's sense of identity becomes insecure, typically due to a change in expected roles or perception of self.

Adolescents

Individuals in the transitional stage of physical and psychological development that typically occurs during the period from puberty to legal adulthood.

Ego Crisis

A critical phase in Erik Erikson's psychosocial development theory, where an individual faces a major conflict that involves reevaluating their identity and purpose.

Middle Adulthood

A developmental stage in human life, usually occurring from ages 40 to 65, characterized by stability, maturity, and responsibility.