Question
James Industries is considering the following investment project. The initial investments, cashflows, WACCs, and probability of each scenario (optimistic, average, pessimistic) are given in the
James Industries 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 (CF stands for cashflow)
| Optimistic | Average | Pessimistic |
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|
|
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| CF (Probability = 30%) | CF (Probability = 40%) | CF (Probability = 30%) |
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 |
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|
|
|
Probability | 30% | 40% | 30% |
WACC | 7.25% | 10.35% | 12.75% |
What are the expected NPV, the standard deviation, and the coefficient of variation of the project?
PLEASE SHOW ALL WORK OR EXCEL FUNCTIONS FOR THUMBS UP
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