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Click here to read the eBook: Measuring Stand-Alone Risk PROJECT RISK ANALYSIS The Butler-Perkins Company (BPC) must decide between two mutually exclusive projects. Each costs
Click here to read the eBook: Measuring Stand-Alone Risk PROJECT RISK ANALYSIS The Butler-Perkins Company (BPC) must decide between two mutually exclusive projects. Each costs $7,000 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 0.6 0.2 $6,250 7,000 7,750 0.2 0.6 0.2 $0 7,000 18,000 BPC has decided to evaluate the riskier project at 13% and the less-risky project at 1096. a. What is each project's expected annual cash flow? Round your answers to two decimal places. Project A$ Project B Project B's standard deviation (Og) Is $5,776 and its coefficient of variation (CVB) s 0.74. what are the values of (a) and (CVA)? Round your answer to two decimal places CVA b. Based on the risk-adjusted NPVs, which project should BPC choose? -Select
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