You can invest in just one of four projects on a lot of land you own. For
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a. Find the expected payoff for each of these four projects. In terms of just the expected payoff, rank these projects in order from best to worst.
b. Find the standard deviation for each of these four projects. In terms of risk only, rank the projects from best to worst.
c. Considering both the expected payoff and the risk involved, can any project or projects be eliminated from consideration entirely?
d. How would you decide among the remaining projects? In particular, does any single project dominate the others completely?
Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at...
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