Question: Project risk analysis Costs, Projects A and B $6,750.00 Expected life of projects (in years) 3 Difference between Project A CFs $750.00 Project A: Probability

Project risk analysis Costs, Projects A and B $6,750.00 Expected life of projects (in years) 3 Difference between Project A CFs $750.00 Project A: Probability Cash Flows 0.2 $6,000.00 0.6 $6,750.00 0.2 $7,500.00 Project B: Probability Cash Flows 0.2 $0.00 0.6 $6,750.00 0.2 $17,000.00 Discount rate, risky project 12.00% Discount rate, less risky project 9.00% Calculation of Expected CF, SD and CV: Formulas Project A: Expected annual cash flow #N/A Standard deviation (SDA) #N/A Coefficient of variation (CVA) #N/A Project B: Expected annual cash flow #N/A Standard deviation (SDB) $9,227.00 Coefficient of variation (CVB) #DIV/0! Which project is riskier? #N/A Project A risk-adju

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