Geary Company is considering a capital expenditure proposal that will cost $30,000 but is expected to yield the following after-tax net cash inflows over its 5-year life:

The cash flows are expected to be normally distributed; however, the cash flows from year to year are not likely to be completely independent of one another. Management believes that for all practical purposes 70% of each year's cash inflows should be treated as independent and 30% as perfectly correlated. The best estimate of the periodic standard deviation of the independent portion of the cash inflows is $ 1,000, and the periodic standard deviation of the dependent portion is believed to be $500. The company's weighted-average cost of capital is 10%.
Required:
(1) Compute the expected net present value of the proposal.
(2) Compute the variance and the standard deviation of the expected net present value.
(3) Compute the coefficient of variation for the capital expenditure proposal.
(4) Determine the probability that the net present value will exceed zero.

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Year 2 4. Expected After-Tax Cash Inflow $ 8,000 11,000 10,000 9,000 7,000 5