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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