Two projects have the following expected net present values and standard deviations of net present values: a.

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Two projects have the following expected net present values and standard deviations of net present values:

a. Using the standard deviation criterion, which project is riskier?
b. Using the coefficient of variation criterion, which project is riskier?
c. Which criterion do you think is appropriate to use in this case?Why?

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Contemporary Financial Management

ISBN: 9780324289114

10th Edition

Authors: James R Mcguigan, R Charles Moyer, William J Kretlow

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Question Posted: Jul 17, 2012 02:44 AM

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Two projects have the following expected net present values and standard deviations of net present values: a.

Question:

Project Expected Net Present Value Standard Deviation $50,000 10,000 $20,000 7,000

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a Project A is riskier using the standard deviation criterion because it has a ...View the full answer

Contemporary Financial Management

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