1. Leland-Morgan Consulting is considering a project and its analysts have projected the following outcomes and their probabilities.

OUTCOME	PROBABILITY	ASSUMPTIONS
$2,000	25%	Pessimistic
$8,000	40%	Moderately successful
$10,000	35%	Optimistic

1. What is the expected value of the outcomes?

2. What is the standard deviation of the outcomes??

3. What is the coefficient of variation of the outcomes?

2. A project requires $10,000 initial investment outlay and has the following expected cash flows:

Year	1	2	3	4	5
Cash flow	$500	$500	$3,000	$3,000	$10,000

1. What is the payback period in years?

2. What is the internal rate of return?

3. What is the profitability index, if the discount rate is 12%?