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Question 3 : The Bultins . . . part 3 excel spreadsheet Costs, Projects A and B Expected life of projects (in years) Difference between

Question 3: The Bultins ... part 3 excel spreadsheet
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Costs, Projects A and B Expected life of projects (in years) Difference between Project A CFs Project A: Probability 0.2 0.6 0.2 3 Project B: Probability 0.2 0.6 0.2 19 Discount rate, risky project 20 Discount rate, less risky project 22 Calculation of Expected CF, SD and CV: 23 Project A: 24 IExpected annual cash flow 25 26 28 29 30 31 33 34 3S 37 38 40 Standard deviation (SDA) Coefficient of variation (CVA) Propct B: Expected annual cash flow Standard deviation (SOB) Coefficient of variation (CVB) Which project is nskier? Project A nsk-adjusted discount rate Project B nsk-adjusted discount rate Calculation of Risk-Adjusted NPVs: NPVA Which project should be chosen? a Sheetl $6,750.00 $500.00 Cash Flows $6,250.00 $6,750.00 $7,250.00 Cash Flows $0.00 $6,750.00 $19,000.00 13.00% 8.00% $9,976.85 #DIV/O! Formulas N/A

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