Options for c:

part 1 - accept/reject

part 2 - yeso

Risky Cash Flows The Bartram-Pulley Company (BPC) must decide between two mutually exclusive investment projects. Each project costs $6,500 and has an expected life of 3 years. Annual net cash flows from each project begin 1 year after the initial investment is made and have the following probability distributions: Project A Project B Probability 0.2 Cash Flows $6,000 6,750 Probability 0.2 Cash Flows $ 0 6,750 0.6 0.6 0.2 7,000 0.2 17,000 BPC has decided to evaluate the riskier project at an 11% rate and the less risky project at a 9% rate. a. What is the expected value of the annual cash flows from each project? Do not round intermediate calculations. Round your answers to the nearest dollar. Project A Project B Net cash flow $ What is the coefficient of variation (CV)? (Hint: OB-$5,443.80 and CVB-$0.73.) Do not round intermediate calculations. Round o values to the nearest cent and CV values to two decimal places. 0 CV Project A $ $ Project B b. What is the risk-adjusted NPV of each project? Do not round intermediate calculations. Round your answers to the nearest cent. $ Project A: $ Project B: c. If it were known that Project B is negatively correlated with other cash flows of the firm whereas Project A is positively correlated, how would this affect the decision? This would tend to reinforce the decision to -Select- Project B. If Project B's cash flows were negatively correlated with gross domestic product (GDP), would that influence your assessment of its risk? -Select-