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	$6,500		0.2	$0
0.6	$7,000		0.6	$7,000
0.2	$7,500		0.2	$19,000

BPC has decided to evaluate the riskier project at 11% and the less-risky project at 10%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.

1. 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 $6,131.88 and its coefficient of variation (CV_B) is 0.77. What are the values of (_A) and (CV_A)? Round your answers to two decimal places.

   _A = $

   CV_A =

B D E A Project risk analysis Costs, Projects A and B Expected life of projects in years) Difference between Project A CFs $7,000.00 3 $500.00 Project A Probability 0.2 0.6 0.2 Cash Flows $6,500.00 $7.000.00 $7,500.00 10 OOO No 13 Project B. 14 Probability 0.2 0.6 17 0.2 18 19 Discount rate, risky project Discount rate, less risky project OOO GO! Cash Flows $0.00 $7,000.00 $19.000.00 11.00% 10.00% 8 8 888 RONUNNUNO NOWN Formulas #N/A 22 Calculation of Expected CF, SD and CV: 23 Project A 24 Expected annual cash flow 25 Standard deviation (SDA) 26 Coefficient of variation (CV) #N/A #N/A #N/A 28 Project B: 29 Expected annual cash flow 30 Standard deviation (SD) 31 Coefficient of variation (CVB) $10,079.68 #DIV/0! #N/A #N/A #N/A 33 Which project is riskier? 34 Project A risk-adjusted discount rate 35 Project B risk-adjusted discount rate 36 37 Calculation of Risk-Adjusted NPVS: 38 NPVA 39 NPV 40 Which project should be chosen? #N/A #N/A #N/A Excel Online Structured Activity: Project risk analysis 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 $6,500 0.2 $0 0.6 $7,000 0.6 $7,000 0.2 $7,500 0.2 $19,000 BPC has decided to evaluate the riskier project at 11% and the less-risky project at 10%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet 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 (p) is $6,131.88 and its coefficient of variation (CVE) is 0.77. What are the values of (CA) and (CVA)? Round your answers to two decimal places. CA = $ CVA =