Richardson Supplies Has Run a Simulation on a Large Project

Multiple Choice

Richardson Supplies has run a simulation on a large project to produce eco-friendly packaging for personal hygiene products.The mean NPV is an impressive $8 000,000, but there is a 16% probability of a negative NPV and a 5% probability of an NPV worse than $6 000,000.

A) Cranston should reject the project.It is too risky.
B) Cranston should accept the project.The odds are in their favor.
C) Cranston should explore options to reduce the likelihood of very unfavorable outcomes.
D) Cranston should change the probabilities used in the simulation to reduce the likelihood of a negative NPV.