Question
The BPC Company must decide among the following three mutually exclusive investment projects. Each project has a positive NPV and each project's MIRR > WACC.
The BPC Company must decide among the following three mutually exclusive investment projects. Each project has a positive NPV and each project's MIRR > WACC. Which invest project should BPC Company select if it has an aversion to risk?
Project | Expected Value | Standard Deviation |
A | $1,800 | $900 |
B | $2,000 | $1,400 |
C | $1,500 | $500 |
Select one:
a.
Project C, because its coefficient of variation is 0.33.
b.
All projects should be accepted because each project's MIRR>WACC.
c.
Project B, because its coefficient of variation is the largest at 0.7.
d.
Project A, because its coefficient of variation is the smallest at 2.0.
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