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The Butler-Perkins Company (BPC) must decide between two mutually exclusive projects. Each costs $7,000 and has an expected life of 3 years. Annual project cash
The Butler-Perkins Company (BPC) must decide between two mutually exclusive projects. Each costs $7,000 and has an expected life of 3 years. Annual project cash flows begin 1 year after the initial investment and are subject to the following probability distributions: Project A Project B Probability Cash Flows Probability Cash Flows 0.2 $6,250 0.2 $0 0.6 $7,000 0.6 $7,000 0.2 $7,750 0.2 $18,000 BPC has decided to evaluate the riskier project at 13% and the less-risky project at 10%. a. What is each project's expected annual cash flow? Round your answers to two decimal places. Project A. $ Project B. $ Project B's standard deviation (?B) is $5,776 and its coefficient of variation (CVB) is 0.74. What are the values of (?A) and (CVA)? Round your answer to two decimal places. ?A = $ CVA =
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