QUESTION 3 (20 MARKS)

Your company is evaluating to invest in a project that requires RM100,000 investment. The required rate of return is 10 percent per annum. You have estimated three different scenarios and have tabled the cash flow projection for each of the scenarios.

Scenario	0 (RM)	Year 1 (RM)	Year 2 (RM)	Pi
Good	-100,000	60,000	80,000	0.4
Fair		50,000	70,000	0.4
Bad		30,000	40,000	0.2

(a) Calculate the Net Present Value (NPV) for each of the scenarios. (9 marks)

(b) By using the above probability (Pi), calculated the expected Net Present Value, E(NPV). (4 marks)

(c) Calculate the standard deviation of NPV. (7 marks)