A project requires an immediate outflow of cash of $ 400 000 in return for the following probable cash flows:

State of Economy	Probability	End of year 1 ($)	End of year 2 ($)
Recession	0.3	100 000	150 000
Growth	0.5	300 000	350 000
Boom	0.2	500 000	550 000

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%. There is no tax or inflation.

1.1 Calculate the expected NPV. (10 marks)

1.2 Calculate the standard deviation of NPV and the coefficient of variance of the NPV. Interpret these results taking into consideration the state of the economy (10 marks).