Nimby plc is considering two mutually exclusive projects: Delphi and Oracle. The possible NPVs for each project and their associated probabilities are as follows:

Delphi Oracle NPV Probability of occurrence NPV Probability of occurrence

£m £m 20 0.2 30 0.5 40 0.6 40 0.3 60 0.2 65 0.2 Required:

(a) Calculate the expected net present value and the standard deviation associated with each project.

(b) Which project would you select and why? State any assumptions you have made in coming to your conclusions.

(c) Discuss the limitations of the standard deviation as a measure of project risk.