Hillier Model ASSE PDF

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Q1 A project with the initial investment of Rs 100 million with a lifespan of four years has the following probabilistic outcomes in different years. Determine the expected net present value of the project and it standard deviation. Also , determine the probability of i) positive NPV of Rs 30 million and ii) loss. Assume 10 % as discounting factor. Year 1 NCF(Million Prob ) 50 20% 30 50% 10 30%

Year 2 NCF(Million Prob ) 60 25% 40 50% 10 25%

Year 3 NCF(Million ) 70 40 -10

Year 4 Prob NCF(Million Prob ) 40% 60 30% 50% 40 55% 10% 20 15%

Q2 Determine the expected NPV and 9.2(i) the probability of earning at least Rs 50 million and 9.2(ii) the probability of making at least no loss with the following information. Initial investment is Rs 150 million and discounting factor is 12 %. Year Expected cashflow (in million) Standard deviation(in million)

1 40

2 60

3 80

4 70

5 50

6

8

10

9

7

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