400 700 800 P. Question 1: The following table shows the NPV probability distribution of the project proposed by your financial advisor NPV 200 300 900 0.2 0.3 ? 0.1 0.05 0.03 1- What kind of project did your financial advisor propose? 2- Find the value of ps. 3- Calculate the expected value of the net present value E(NPV). 4- If we are limited to this criterion, is the project worthwhile? 5- Calculate the variance of NPV and deduce the standard deviation of the NPV. 6- What is the probability that the NPV of the project is less than or equal to zero? 7- If we have an alternative project with E(NPV) = 380 and 6(NPV)=190, what would be your decision? Question 2: Suppose we have an investment project with initial expenditure equal to 9000 SAR and the distribution of cash flows are as follows: Period 1 Cash-flow Pi 4000 0.25 5000 0.10 6000 0.30 7000 0.10 8000 0.25 Period2 Cash-flow Pi 3000 0.10 4000 0.25 5000 0.30 6000 0.25 7000 0.10 1- What kind of project did you have? 2. What are the relation types between cash flows? 3. Calculate the expected value of CFI and CF2 4- Calculate the expected value of NPV if the risk-free rate equal to 8%. 5. If cash flows are considered independent 5-1 Calculate the variance and standard deviation of the NPV. 5-2 What is the probability that the NPV of the project is less than or equal to zero? 6- If cash flows are considered totally dependent 6-1 Calculate the variance and standard deviation of the NPV. 6-2 What is the probability that the NPV of the project is less than or equal to zero? 6-3 What is the probability that the profitability index is greater than 2