Question $4,$ P$12-12($similar to$)$

HW Score: $55\%,22$ of $40$ points

Part $1$ of $8$

Points: $0$ of $5$ client. Boardman has enough money to build either type of plant, and, in the absence of risk differences, accepts the project with the highest NPV$.$ The cost of capital is $17\mathrm{.}5\%.$

a$.$ Find the NPV for each project. Are the projects acceptable?

b$.$ Find the break$-$even cash inflow for each project.

c$.$ The firm has estimated the probabilities of achieving various ranges of cash inflows for the two projects, as shown in the table $$ What is the probability that each project will achieve the break$-$even cash inflow found in part $($b$)?$

d$.$ Which project is more risky? Which project has the potentially higher NPV$?$ Discuss the risk$-$return trade$-$offs of the two projects.

e$.$ If the firm wished to minimize losses $($that is$,$ NPV $$ $$0),$ which project would you recommend? Which would you recommend if the goal was achieving a higher NPV$?$

a$.$ The NPV for project "standard" is $ $($Round to the nearest cent.$)$

Data table

$\backslash$table$[[,$Probability of achieving cash inflow in given range$],[$Range of cash inflow $($$ millions$),$Standard Plant,Custom Plant$],[$$$0$ to $$5,0\%,5\%$