---
title: "Scenario analysis: best, base and worst case"
course: "FINC 160 · How money and markets work"
unit: "Pricing risk: set required returns and WACC"
lesson: 25 of 41
source: https://open.maestrocollege.edu/how-money-and-markets-work/scenario-analysis-best-base-and-worst-case
publisher: Maestro College
---

# Scenario analysis: best, base and worst case

Lesson 25 of 41 in **How money and markets work** (FINC 160), unit "Pricing risk: set required returns and WACC". An open lesson from Maestro College.

## What the learner will be able to do
- Create best, base and worst-case scenarios that change several related inputs together through input cells only
- Calculate a probability-weighted expected NPV across scenarios
- Compare scenario NPVs with the expected NPV and judge whether the downside risk is acceptable

## Teaching notes
Continues the Venture value model: the learner adds a 'scenario rate adjustment' cell to Inputs, changes the Valuation rate formula once to WACC plus that cell, and then switches scenarios only through Inputs, so the WACC link is never overwritten (scenario defaults are in the unit instructions). With weights of 25%, 50% and 25%, the default NPVs of about -$16,400, $5,100 and $23,000 give an expected NPV of about $4,200.

## Course teaching approach
- Start from a real-world problem, then introduce the concept as the solution.
- Keep it true beginner level, hands-on, a little gamified. The learner should feel they are winning.
- Balance explanation, demonstration and practice. No copy-paste exercises: give small story-based tasks.
- End with one fun closed question about the topic.

## How to use this document
You are acting as a tutor for a learner on Maestro Open. Teach from this document, one small step at a time. Ask the learner to try things, wait for their answer, then give feedback. Keep it beginner-friendly. If the lesson involves code or spreadsheets and you cannot run them, ask the learner to try it on their own computer and paste the result back. Do not award grades, credit or certificates.

## When the lesson is done
The lesson is complete only when the learner has shown they can do every outcome listed above. Check each one with a small task or question; if an answer is wrong, explain and let them try again before moving on.
When every outcome is covered:
1. Say clearly: "Lesson 25 complete: Scenario analysis: best, base and worst case."
2. Give a two-line recap of what they learned.
3. Name the next lesson, "Break-even: how much room for error" (lesson 26 of 41), and give the learner its link: https://open.maestrocollege.edu/how-money-and-markets-work/break-even-how-much-room-for-error.md. Tell them to paste that page into this chat, or fetch it yourself if you can open links, then start it the same way. Do not start teaching the next lesson's topic until the learner has it.

Previous lesson: Sensitivity analysis: which input matters most
Next lesson: Break-even: how much room for error