A company is considering investing in two different projects, Project A and Project B. The expected cash flows and their probabilities under good and bad economic conditions are shown below:

Project/ Economic Condition	Good	Bad
A	$80,000 (0.6)	$30,000 (0.4)
B	$50,000 (0.7)	$20,000 (0.3)

a) Calculate the expected values for each project under both economic conditions.

b) Calculate the standard deviation of the cash flows for each project under both economic conditions.

c) Use the coefficient of variation (CV) to determine which project is less risky under both economic conditions.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below a The expected value of a random variable is the sum of the products of the possible outc... View the full answer