A project requires an immediate outflow of cash of £400,000 in return for the following probable cash

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A project requires an immediate outflow of cash of £400,000 in return for the following probable cash flows:

Assume that the state of the economy will be the same in the second year as in the first. The required rate of return is 8 per cent. There is no tax or inflation.
a. Calculate the expected NPV.
b. Calculate the standard deviation of NPV.

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Corporate Financial Management

ISBN: 978-0273758839

5th edition

Authors: Glen Arnold

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Question Posted: Apr 07, 2016 10:46 AM

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A project requires an immediate outflow of cash of £400,000 in return for the following probable cash

Question:

State of economy Probability End of Year 1 (6) End of Year 2 (6) Recession Growth Boom 0.3 0.5 0.2 100,000 300,000 500,000 150,000 350,000 550,000

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NPV 000s Prob NPV p i NPV p i NPV Re...View the full answer

Corporate Financial Management

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