Risky Cash Flows

The Bartram-Pulley Company (BPC) must decide between two mutually exclusive investment projects. Each project costs $7,000 and has an expected life 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 Flows	Probability	Net Cash Flows
0.2	$5,000	0.2	$ 0
0.6	6,750	0.6	6,750
0.2	7,500	0.2	21,000

BPC has decided to evaluate the riskier project at a 12% rate and the less risky project at a 8% rate.

What is the expected value of the annual net cash flows from each project? Do not round intermediate calculations. Round your answers to nearest dollar.

	Project A	Project B
Net cash flow	$	$

What is the coefficient of variation (CV)? Do not round intermediate calculations. (Hint:B=$6,890 and CVB=$0.84.)

	(to the nearest whole number)	CV (to 2 decimal places)
Project A	$
Project B	$

What is the risk-adjusted NPV of each project? Do not round intermediate calculations. Round your answer to the nearest dollar.

Project A		$9786.25 is correct
Project B	$