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 |
|
|
|
|
| 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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