You are evaluating a proposed investment to enhance a consumer payments rewards feature at a mid-sized financial services company. The project requires upfront technology and marketing spend now, and management wants to know whether the expected return justifies the risk before next year's planning cycle is finalized. You have a three-scenario forecast from the product and finance teams, and your CFO wants a recommendation grounded in expected value and downside exposure rather than a purely qualitative view.
| Metric | Downside | Base | Upside |
|---|---|---|---|
| Probability | 25% | 50% | 25% |
| Annual incremental net cash inflow (Years 1-3) | $6,000,000 | $9,000,000 | $13,000,000 |
| Additional Input | Value |
|---|---|
| Upfront investment at Year 0 | $20,000,000 |
| Discount rate | 10% |
| Terminal value | $0 |
How would you assess the risk and return of this investment, and would you recommend approving it based on the expected NPV and the dispersion of outcomes?