A networking service company is examining two mutually exclusive projects. The probability distributions of annual cash...

 

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A networking service company is examining two mutually exclusive projects. The probability distributions of annual cash inflows are presented below: Probability 0.25 0.25 PROJECT A 0.25 0.25 Cash Flow $7,000 8,000 9,000 10,000 Probability 0.20 0.30 0.30 PROJECT B 0.20 Cash Flow $5,000 6,000 7,000 8,000 What is the expected value and standard deviation of annual cash flows for each project? Which project's cash flows appears riskier? A networking service company is examining two mutually exclusive projects. The probability distributions of annual cash inflows are presented below: Probability 0.25 0.25 PROJECT A 0.25 0.25 Cash Flow $7,000 8,000 9,000 10,000 Probability 0.20 0.30 0.30 PROJECT B 0.20 Cash Flow $5,000 6,000 7,000 8,000 What is the expected value and standard deviation of annual cash flows for each project? Which project's cash flows appears riskier?

Answer rating: 100% (QA)

SOLUTION To calculate the expected value and standard deviation of annual cash flows for each projec... View the full answer