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Giordano Company (GC) is considering the following investment project. The initial investments, cashflows, WACCs, and probability of each scenario (optimistic, average, pessimistic) are given in

Giordano Company (GC) is considering the following investment project. The initial investments, cashflows, WACCs, and probability of each scenario (optimistic, average, pessimistic) are given in the following table.

Optimistic

Average

Pessimistic

CF (Probability = 30%). CFs in million $

CF (Probability = 40%). CFs in million $

CF (Probability = 30%). CFs in million $

0

-770

-1,025

-1,280

1

3,320

525

-1,560

2

3,151

425

-1,679

3

2,940

320

-1,685

4

2,657

150

-1,776

Probability

30%

40%

30%

WACC

7.25%

10.35%

12.75%

a) What are the expected NPV, the standard deviation, and the coefficient of variation of the project?

b) You must explain your approach in 5 lines in writing.

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