Question: Saskatchewan Aeronautics Corporation (SAC) is considering two mutually exclusive projects with the following net present value profiles: Required: (a) Calculate the expected net present value

Saskatchewan Aeronautics Corporation (SAC) is considering two mutually exclusive projects with the following net present value profiles:

Required:
(a) Calculate the expected net present value for each project.
(b) Calculate the standard deviation for each project.
(c) Which project should SAC accept? Why?

Project 1 Project 2 NPV Probability Probability NPV (S millions) 50 45 40 S millions) 100 75 10 20% 10% 70% 50% 40% 10%

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