Question: A firm is considering two alternative projects. Project A needs an investment of $800,000. Project B needs an investment of $750,000. Relevant annual cash flow
A firm is considering two alternative projects. Project A needs an investment of $800,000. Project B needs an investment of $750,000. Relevant annual cash flow data for the two projects over their expected seven-year lives are as follows:
Project A
Pr. .....................Cash Flow
0.50 .............................$ 0
0.50 ..................$ 500,000
Project B
Pr. ....................Cash Flow
0.045 ...........................$ 0
0.910 ................$ 200,000
0.045 ................$ 400,000
Calculate the expected value, standard deviation, and coefficient of variation of cash flows for each project.
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