A 4-year financial project is forecast to have net cash inflows of $20,000; $25,000; $30,000; and $50,000 in the next 4 years. it will cost $75,000 to implement the project, payable at the beginning of the project. If the required rate of return is 0.2, conduct a discounted cash flow calculation to determine the NPV.
Now, however, assume that the new cash inflows are probabilistic variables. Further assume that each forecast net cash inflow is normally distributed with standard deviations of $1,000; $1,500; $2,000; and $3,500, respectively. Given a required rate of return of 0.2, find the mean forecast NPV using crystal ball (or Excel). What is the probability that the actual NPV will be positive?