You are considering two mutually exclusive projects with the following cash flows:

(a) Compute the mean and variance of NPW distribution for each project using i = 12%. Assume that project cash flows are mutually independent.
(b) Which project has a higher probability of losing money?

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Projected Cash Flows Project A Probabilities Project B $180,000 $45,000 $55,000 Investment required |Annual cash flows and probabilities of occurrence for each of five years $150,000 1.0 $35,000 $40,000 $50,000 0.3 0.5 $67,000 0.2