Consider the following investment cash flows over a three€year life:

(a) If all cash flows are mutually independent, compute E(NPW) and Var(NPW) at i = 10%.
(b) If all annual cash flows are normally distributed with the means and variances as previously specified, compute the probability that the project will make a profit higher than its expected NPW.

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Var(A„) E(A„) п -$1,000 2002 $500 3002 $1,500 1002 $800 3