Question: A networking service company is examining two mutually exclusive projects. The probability distributions of annual cash inflows are presented below: PROJECT A PROJECT B Probability

  1. A networking service company is examining two mutually exclusive projects. The probability distributions of annual cash inflows are presented below:

PROJECT A PROJECT B

Probability Cash Flow Probability Cash Flow

0.25 $7,000 0.20 $5,000

0.25 8,000 0.30 6,000

0.25 9,000 0.30 7,000

0.25 10,000 0.20 8,000

What is the expected value and standard deviation of annual cash flows for each project? Which project's cash flows appears riskier?

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