An investor has projected three possible scenarios for a project as follows: PessimisticNOI will be $205,000 the first year, and then decrease 2 percent per year over a five-year holding period. The property will sell for $1.82 million after five years. Most likelyNOI will be level at $205,000 per year for the next five years (level NOI) and the property will sell for $2.05 million. OptimisticNOI will be $205,000 the first year and increase 3 percent per year over a five-year holding period. The property will then sell for $2.30 million. The asking price for the property is $2.05 million. The investor thinks there is about a 30 percent probability for the pessimistic scenario, a 40 percent probability for the most likely scenario, and a 30 percent probability for the optimistic scenario.

Required:

a. Compute the IRR for each scenario.

	IRR
Optimistic	7.71 selected answer correct	%
Most likely	10.00 selected answer correct	%
Pessimistic	12.45 selected answer correct	%

b. Compute the expected IRR.

Expected IRR

10.05 selected answer correct

%

c. Compute the variance and standard deviation of the IRRs.

Compute the variance and standard deviation of the IRRs. (Do not round intermediate calculations. Round "Variance" to 4 decimal places and "Standard deviation" to 2 decimal places.)

Variance	0.0003 selected answer incorrect	%
Standard deviation	1.84 selected answer correct	%

PLEASE ANSWER PART C: Variance only.