Calculate the standard deviation of the net present worth


A company's marketing strategy will last two years and produce revenue in years 1 and 2 only. The strategy can result in a success, a moderate success, or a failure. The marketing strategy will cost $60,000 immediately (year 0), $38,000 in year 1, and $12,000 in year 2. There is uncertainty with projected revenues, but the forecasted revenues and probabilities for the marketing strategy are as follows: - Success: Year 1: $89,000; Year 2: $112,000; Probability: 0.26 - Moderate success: Year 1: $78,000; Year 2: $70,000; Probability: 0.42 - Failure: Year 1: $39,000; Year 2: $50,000; Probability: 0.32 The company's MARR is 15%. You can ignore any other costs except for the marketing costs. Calculate the standard deviation of the net present worth for the strategy. HINT: it is easier to calculate the net present worth of each separate result first (success, moderate success, failure) before dealing with the probabilities

Request for Solution File

Ask an Expert for Answer!!
Financial Management: Calculate the standard deviation of the net present worth
Reference No:- TGS02830551

Expected delivery within 24 Hours