2-7 SCENARIO ANALYSIS Huang 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: Economic Scenario    Probability of Outcome    NPV Recession    0.05    ($70 million) Below average    0.20    (25 million) Average    0.50    12 million Above average    0.20    20 million Boom    0.05    30 million Calculate the project’s expected NPV, standard deviation, and coefficient of variation.

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.