Risky Cash Flows

The Bartram-Pulley Company (BPC) must decide between two mutually exclusive investment projects. Each project costs $7,500 and has an expectedlife of 3 years. Annual net cash flows from each project begin 1 year after the initial investment is made and have the following probability distributions:

PROJECT A		PROJECT B
Probability	Net Cash Flow	Probability	Net Cash Flow
0.2	$6,000	0.2	$ 0
0.6	6,750	0.6	6,750
0.2	7,000	0.2	16,000

BPC has decided to evaluate the riskier project at a 11% rate and the less risky project at a 8% rate.

What is the risk-adjusted NPV of each project? Round your answer to the nearest dollar.

a. What is the expected value of the annual net cash flows from each project? Round your answers to nearest dollar. ProjectA Project B Net cash flow $6650 $7250 What is the coefficient of variation (CV)? (to the nearest whole number) $339.11 $5096.5 CV (to 2 decimal places) Project A 0.051 Project B 0.703