12-6 If Company ABC is expected to have different NPVs under different scenarios as below:

Scenario Probability NPV (in million)

1 5% -$70

2 20% -$25

3 50% $12

4 20% $20

5 5% $30

What is the Company's E(NPV),NPV,and CV?

12-5For two projects A and B, both have initial capital outlay of $20,000 at T=0, Project A has 6 year physical life time with annual cash flow of $6,000. Project B has 3 year physical life time with same $6,000 annual cash flow. If the discount rate is 10%, which project should be chosen if using EEA (Equivalent Annual Annuity) approach to calculate?