Consider Problem 11.21. If your risk€adjusted discount rate is 18%, is this project justifiable?

Data From Problem 11.21

Assume that we can estimate a project€™s cash flows as follows:

In this case, each annual flow can be represented by a random variable with known mean and variance. Further assume complete independence among the cash flows.
(a) Find the expected NPW and the variance of this project at i = 10%.
(b) If all cash flows are normally distributed with the given means and variances, what is the probability that the NPW will exceed $200?

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Expected Flow E(A„) Estimate of Standard Deviation o, $20 -$300 $120 $150 $10 $15 3 $150 $20 4 $25 $30 $110 $100 4)