Question
Smiley Computers must evaluate the risk of the following project. The initial investment in year 0 is $6750 and the expected life of the project
Smiley Computers must evaluate the risk of the following project. The initial investment in year 0 is $6750 and the expected life of the project is 3 years. There are 3 possible scenarios: 1) with probability 0.2 the subsequent cash flow in each of the years 1, 2 and 3 is 6000; 2) with probability 0.6 the subsequent cash flow in each of the years 1, 2 and 3 is 6750; 3) with probability 0.2 the subsequent cash flow in each of the years 1, 2 and 3 is 7500. The WACC of the project is 10%. What is the coefficient of variation (CV) of the NPV of the project? Round your answers to the second digit after the decimal point. (can u give the process ,plz)
A.0.12
B.1.76
C.1.16
D.0.76
E.0.07
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