Columbia Corporation is considering an investment in new machinery with a 7 year estimated useful life and an estimated net present value of $12,000 The cash inflows are expected to be normally distributed however, 60 of each period 's cash inflow is expected to be independent, and the remaining 40...

1 2 Periodic 3 Present 4 Present Value of Standard Year Standard Deviation Value of 1 10 Deviation 2 ...

Columbia Corporation is considering an investment in new machinery with a 7-year estimated useful life and an

Question:

Columbia is considering an investment in new machinery with a 7-year estimated useful life and an estimated of $12,000. The cash inflows are expected to be normally distributed; however, 60% of each period's cash inflow is expected to be independent, and the remaining 40% is expected to be perfectly correlated. Cash inflows are expected to be $10,000 each period. The periodic independent cash inflows have a standard deviation of $1,000, and the periodic dependent cash inflows have a standard deviation of $ 1,500. The initial cash outflow has a standard deviation of zero. The corporation's weighted-average is 12%.
Required:
Compute the standard deviation of the expected . Net Present Value
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