# The group estimates an NPV of $10 million if the population growth is 10% (40% probability), an... ## Question: The group estimates an NPV of$10 million if the population growth is 10% (40% probability), an NPV of $4 million if the population does not grow (30% probability), and an NPV of -$4 million if the population shrinks by 5% (30% probability). What is the expected value of NPV?

Expected NPV is the sum of the weighted NPV of each possibility based on their probability outcomes:

• NPV = ($10,000,000 * 40%) + ($4,000,000 * 30%) + (-$4,000,000 * 30%) • NPV =$4,000,000 + 1,200,000 - 1,200,000
• NPV = \$4,000,000