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17. A project requires an immediate outflow of cash of OMR 500,000 in return for the following probable cash flows: State of economy Probability End
17. A project requires an immediate outflow of cash of OMR 500,000 in return for the following probable cash flows: State of economy Probability End of Year 1 (OMR) End of Year 2 (OMR) Recession 0.3 150000 100000 Growth 0.5 350000 300000 Boom 0.2 550000 500000 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 (2 marks) b. Calculate the standard deviation of NPV
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