Question

Broadband, Inc. has estimated preliminary cash flows for a project and found that the NPV for those cash flows is $1,000,000. The company now plans to perform a scenario analysis on the cash flow and NPV estimates. It will use an NPV of $Blank______ as the base case.

Multiple choice question.

1,000,000


2,000,000


1,100,000


500,000

Answer 1

In a scenario analysis, the base case typically refers to the most likely or expected scenario of cash flows and their resultant NPV. Since Broadband, Inc. has already calculated the NPV for the preliminary cash flows and found it to be $1,000,000, this would be the appropriate figure to use as the base case.

Therefore, the correct answer is:

**1,000,000**