The Butler-Perkins Company (BPC) must decide between two mutually exclusive projects. Each costs $6,750 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 $6,750   0.6 $6,750   0.2 $7,000   0.2 $19,000   BPC has decided to evaluate the riskier project at 12% and the less-risky project at 8%. 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 (σB) is $6,157.52 and its coefficient of variation (CVB) is 0.78. What are the values of (σA) and (CVA)? Round your answers to two decimal places. σA = $   CVA =

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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The Butler-Perkins Company (BPC) must decide between two mutually exclusive projects. Each costs $6,750 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 $6,750   0.6 $6,750  
0.2 $7,000   0.2 $19,000  

BPC has decided to evaluate the riskier project at 12% and the less-risky project at 8%.

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 (σB) is $6,157.52 and its coefficient of variation (CVB) is 0.78. What are the values of (σA) and (CVA)? Round your answers to two decimal places.

σA = $  

CVA =

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