The Bartram-Pulley Company (BPC) must decide between two mutually exclusive investment projects. Each project costs $5,750 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 APROJECT BProbabilityNet Cash

FlowsProbabilityNet Cash

Flows0.2$6,0000.2$00.66,7500.66,7500.28,0000.220,000

BPC has decided to evaluate the riskier project at a 11% rate and the less risky project at a 10% rate.

1. 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.
2. Project AProject BNet cash flow$$
3. What is the coefficient of variation (CV)? Do not round intermediate calculations. (Hint:B=$6,522 and CVB=$0.81.)
4. (to the nearest whole number)CV (to 2 decimal places)Project A$Project B$
6. What is the risk-adjusted NPV of each project? Do not round intermediate calculations. Round your answer to the nearest dollar.
7. Project A$Project B$
9. If it were known that Project B is negatively correlated with other cash flows of the firm whereas Project A is positively correlated, how would this affect the decision?
10. This would tend to reinforce the decision to-Select-
11. accept
12. reject
13. Item 9
14. Project B.
16. If Project B's cash flows were negatively correlated with gross domestic product (GDP), would that influence your assessment of its risk?
17. -Select-
18. Yes
19. No
20. Item 10