The You have done a thorough analysis of a potential new project. You believe that the economic conditions in the next years can be categorized into states. For each of the states, you calculated the expected NPV using the firms WACC. States Probability Expected NPV :

Extreme boom $

Boom

Mild growth

Mild recession

Severe recession

a What is the probability of a severe recession?

b What is the expected NPV of this project?

c What is the riskiness of this project?

d What is this projects coefficient of variation CV

e The firms average CV is Is this project more or less risky than the firms a project?

f Using all your answers in the previous parts, should you rerun your analysis? Why or why not?