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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

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%

What is the expected NPV, the standard deviation, and the coefficient of variation of the project?

USE EXCEL AND SHOW ALL FUNCTIONS!

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