Excel Online Structured Activity: Project risk analysis The Butler-Perkins Company (BPC) must decide between two mutually exclusive projects. Each costs $6,500 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 0.2 $0 $6,250 $6,500 0.6 0.6 $6,500 0.2 $6,750 0.2 $19,000 BPC has decided to evaluate the riskler project at 11% and the less risky project at 8%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. What is each project's expected annual cash flow? Round your answers to two decimal places. 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 (p) is $6,185.47 and its coefficient of variation (CV) is 0.80. What are the values of (a) and (CV Round your answers to two decimal places. 0A - $ CVA = b. Based on the risk-adjusted NPVs, which project should BPC choose? c. If you knew that Project B's cash flows were negatively correlated with the firm's other cash flow, but Project A's cash flows were positively correlated, how might this affect the decision? If Project B's cash flows were negatively correlated with gross domestic product (GDP), while A's cash flows were positively correlated, would that influence your risk assessment? Base price Additional modification costs Before-tax salvage proceeds Change in NOWC Before-tax labor cost savings WACC Tax rate $180,000 $45,000 $90,000 $12,000 542,000 14.00% 40.00% Yr.o Depreciation rates Base price Modification costs NOWC $42 000 00 $42.000.00 542,000.00 Before-tax labor cost savings Depreciation $90,000.00 ore-tax salvage proceeds on salvage value WC recapture ject cash flows $12,000.00 pject acceptance? Formulas Yr. 3 ase price modification costs OWC Yr. O #N/A #N/A #N/A $42,000.00 efore-tax labor cost savings Hepreciation perating income axes fter-tax operating income dd back depreciation Operating cash flows $42,000.00 #N/A #N/A #N/A #N/A #N/A #N/A $42.000.00 #N/A #N/A #N/A N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #NIA #N/A UNIA - Operating income Taxes After-tax operating income Add back depreciation Operating cash flows #N/A #NA #N/A #NIA #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A $90,000.00 Termination cash flows Before-tax salvage proceeds Tax on salvage value NOWC recapture Project cash flows #N/A $12,000.00 #NA #NIA UNIA #N/A NPV Project acceptance? #N/A #NA