The management of ABC wants to invest in a project requiring an initial outlay of Rs 1,20,000,
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The management of ABC wants to invest in a project requiring an initial outlay of Rs 1,20,000, whose cash flows are assumed to be made up of two components-one of which varies independently over time, c;, and the other that is perfectly correlated, Ci. Each of them is normally distributed with the following parameters:
Compute the expected NPV and its standard deviation. What probability shall be assigned to the NPV of the project exceeding Rs 20,000? (Use a discount rate of 10%.)
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