THE NEXT FOUR (4) QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION: The following is a distribution of possible after-tax cash flows for a real estate project in Montreal. Year 1 Year 2 Year 3 Reversion Year 3 Poor (probability) $1,000 (0.3) $1,200 (0.2) $1,500 (0.3) $32,000 (0.4) State of the Economy $1,200 (0.2) $1,400 (0.2) $1,800 (0.6) $38,000 (0.5) Fair (probability) Good (probability) $1,500 (0.5) $1,600 (0.6) $2,000 (0.1) $42,000 (0.1) The project will be purchased for $28,000 and will be held for 3 years. The required after-tax rate of return on capital invested in the project is j, =6%. 13. Calculate the expected NPV of the project. (Hint: Students may find it helpful to refer to Table 10.10 in the course manual in answering this question). (1) $6,607 (2) $6,213 (3) $6,121 (4) $7,919 14. Calculate the variance of the expected NPV for the project. (Hint: Students may find it helpful to refer to Table 10.11 in the course manual in answering this question): (1) 6,762,394 (2) 7,232,767 (3) 8,541,725 (4) 7,983,345