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Your team is evaluating two mutually exclusive projects. The initial cost of each investment is $50,000. The probability of the annual cash flows is shown below ( note these cash flows and probabilities are the same each year). If the project will have a 5-year life and the appropriate cost of capital is 9% calculate the following: Probability CF(A) CF(B) 10% (34,000) (13,500) 25% (8,500) 2,125 30% 17,000 19,000 25% 42,500 31,875 10% 68,000 46,750 a) Expected cash flow per year b) Standard deviation c) NPV d) IRR e) MIRR

Your team is evaluating two mutually exclusive projects. The initial cost of each investment is $50,000. The probability of the annual cash flows is shown below ( note these cash flows and probabilities are the same each year). If the project will have a 5-year life and the appropriate cost of capital is 9% calculate the following: Probability CF(A) CF(B) 10% (34,000) (13,500) 25% (8,500) 2,125 30% 17,000 19,000 25% 42,500 31,875 10% 68,000 46,750 a) Expected cash flow per year b) Standard deviation c) NPV d) IRR e) MIRR

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Your team is evaluating two mutually exclusive projects. The initial cost of each investment is $50,000. The probability of the annual cash flows is shown below ( note these cash flows and probabilities are the same each year). If the project will have a 5-year life and the appropriate cost of capital is 9% calculate the following: Probability CF(A) CF(B) 10% (34,000) (13,500) 25% (8,500) 2,125 30% 17,000 19,000 25% 42,500 31,875 10% 68,000 46,750 a) Expected cash flow per year b) Standard deviation c) NPV d) IRR e) MIRR
Transcribed Image Text:Your team is evaluating two mutually exclusive projects. The initial cost of each investment is $50,000. The probability of the annual cash flows is shown below ( note these cash flows and probabilities are the same each year). If the project will have a 5-year life and the appropriate cost of capital is 9% calculate the following: Probability CF(A) CF(B) 10% (34,000) (13,500) 25% (8,500) 2,125 30% 17,000 19,000 25% 42,500 31,875 10% 68,000 46,750 a) Expected cash flow per year b) Standard deviation c) NPV d) IRR e) MIRR
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