Capital Budgeting
After making these modifications, run another simulation of 10,000 iterations and overlay the NPV
histogram from your part III model on the NPV histograms from your Part II model, then answer
the following questions.
• What are the expected values for the Florida plant’s NPV and IRR?
• What are the 95% confidence intervals for the NPV and IRR?
• What is the likelihood that this expansion project will decrease L&L’s fundamental value?
• Does this new information change your previous recommendation regarding the Florida
plant?
