Problem $12\mathrm{.}12($Project Risk Analysis$)$

$$ investment and are subject to the following probability distributions:

$\backslash$table$[[$Project A$,,$Project B$],[$Probability$,$Cash Flows,,Probability,Cash Flows$],[0\mathrm{.}2,$$$6,250,,0\mathrm{.}2,0],[0\mathrm{.}6,6,500,,0\mathrm{.}6,6,500],[0\mathrm{.}2,6,750,,0\mathrm{.}2,18,000]]$

BPC has decided to evaluate the riskier project at $13\%$ and the less$-$risky project at $9\%.$

a$.$ What is each project's expected annual after$-$tax cash flow? Round your answers to the nearest cent.

Project A:

Project B:

$

$ of variation to two decimal places.

${}_A$: $$

$C{V}_A$:

$$

$$

b$.$ Racar an the risk$-$adjusted NPVs$,$ which project should BPC choose?

$$

c$.$ If you knew that Project B$\text{'}$s cash flows were negatively correlated with the.firm's other cash flows, but Project A$\text{'}$s cash flows were positively correlated, how might this affect the decision? $-$Select$-$

If Project B$\text{'}$s cash flows were negatively correlated with gross domestic product $($GDP$),$ while A$\text{'}$s cash flows were positively correlated, would that influence your risk assessment?

$-$Select$-$