7.

PROJECT RISK ANALYSIS

The Butler-Perkins Company (BPC) must decide between two mutually exclusive projects. Each costs $6,500 and has an expected life of 3 years. Annual project cash flows begin 1 year after the initial investment and are subject to the following probability distributions:

Project A			Project B
Probability	Cash Flows		Probability	Cash Flows
0.2	$5,750		0.2	$0
0.6	6,500		0.6	6,500
0.2	7,250		0.2	17,000

BPC has decided to evaluate the riskier project at 11% and the less-risky project at 9%.

What is each project's expected annual cash flow? Round your answers to two decimal places.

Project A $

Project B $

Project B's standard deviation (B) is $5,464 and its coefficient of variation (CVB) is 0.75. What are the values of (A) and (CVA)? Round your answer to two decimal places.

A = $

CVA =