Decision Tree

The Yoran Yacht Company $($YYC$),$ a prominent sailboat builder in Newport, may design a new $30-$foot sailboat based on the "winged" keels first introduced on the $12-$meter yachts that raced for the America's Cup.

will be abandoned with zero salvage value.

$$100,000.$ The managers estimate that the probability is $80\%$ that the boats will pass testing and that Stage $3$ will be undertaken.

million. Both net values occur at $t=3,$ and each state of the economy has a probability of $0\mathrm{.}5.$ YYC$\text{'}$s corporate cost of capital is $13\%.$

Round your answer to the nearest cent.

$

Round the project's standard deviation to the nearest cent and $CV$ to two decimal places.

${}_{NPV}$:$

CV ${?}_{NPV\text{:}}$

If YYC$\text{'}$s average project had a CV of between $1\mathrm{.}0$ and $2\mathrm{.}0,$ would this project be of high, low, or average stand$-$alone risk?

This project is of

risk.Decision Tree

The Yoran Yacht Company $($YYC$),$ a prominent sailboat builder in Newport, may design a new $30-$foot sailboat based on the "winged" keels first introduced on the $12-$meter yachts that raced for the America's Cup.

will be abandoned with zero salvage value.

$$100,000.$ The managers estimate that the probability is $80\%$ that the boats will pass testing and that Stage $3$ will be undertaken.

million. Both net values occur at $t=3,$ and each state of the economy has a probability of $0\mathrm{.}5.$ YYC$\text{'}$s corporate cost of capital is $13\%.$

Round your answer to the nearest cent.

$

Round the project's standard deviation to the nearest cent and $CV$ to two decimal places.

${}_{NPV}$:$

CV ${?}_{NPV\text{:}}$

If YYC$\text{'}$s average project had a CV of between $1\mathrm{.}0$ and $2\mathrm{.}0,$ would this project be of high, low, or average stand$-$alone risk?

This project is of

risk.