1) Scenario analysis - XYZ Industries is considering a proposed project whose estimated NPV is $12 million. This estimate assumes that economic conditions will be "average." However, the CFO realizes that conditions could be better or worse, so she performed a scenario analysis and obtained these results:
Calculate the project's expected NPV, standard deviation, and coefficient of variation.
2) Breakeven analysis - A Company sells watches for $25; the fixed costs are $140,000; and variable costs are $15 per watch.
a. What is the firm's gain or loss at sales of 8,000 watches? At 18,000 watches?
b. What is the breakeven point? Illustrate by means of a chart.
c. What would happen to the breakeven point if the selling price were raised to $31? What is the significance of this analysis?
d. What would happen to the breakeven point if the selling price were raised to $31 but variable costs rose to $23 a unit?
Please show all calculation in EXCEL so I can follow solutions
The solution has answers to two questions on capital budgeting (calculation of project's expected NPV, standard deviation, and coefficient of variation) and Breakeven analysis.