Cranston Plastic Packaging Solutions Has Run a Simulation on a Large

question 30

Multiple Choice

Cranston Plastic Packaging Solutions has run a simulation on a large project to produce eco-friendly packaging for personal hygiene products. The mean NPV is an impressive $8,000,000, but there is a 16% probability of a negative NPV and a 5% probability of an NPV worse than ($6,000,000) .

• A) Cranston should reject the project. It is too risky.
• B) Cranston should accept the project. The odds are in their favor.
• C) Cranston should explore options to reduce the likelihood of very unfavorable outcomes.
• D) Cranston should change the probabilities used in the simulation to reduce the likelihood of a negative NPV.

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Definitions:

Kilometers

A unit of measurement equal to 1,000 meters, commonly used to measure distances between geographical locations.

Eroded

The process by which natural forces remove soils, rock, or dissolved material from one location and transport it to another, often leading to changes in landscape and topography.

Volcanic

Pertaining to the processes associated with the eruption and formation of volcanoes and their emitted materials.

Basalt

A dark, fine-grained volcanic rock that is formed from the rapid cooling of basaltic lava exposed at or very near the surface of a planet.