Aggarwal is considering a new project that has a cost of $1,000,000 and the CFO set up the following simple decision tree to show its three most likely scenarios. The firm could arrange with its work force and suppliers to cease operations at the end of year 1 should it choose to do so but to obtain this abandonment, it would have to make a payment to those parties. Calculate the project's coefficient of variation.

WACC = 6.86% Dollars in thousands

_____________t= 0 __ t=1 ___ t=2 ___ t=3

Prob = 20%__-$1,000 $800___ $800 ___$800

Prob = 60%_________$520 ____$520____$520

Prob = 20% ________ -$200