Question: The Bartram-Pulley Company (BPC) must decide between two mutually exclusive investment projects. Each project costs $7,500 and has an expected life of 3 years. Annual

The Bartram-Pulley Company (BPC) must decide between two mutually exclusive investment projects. Each project costs $7,500 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 Net Cash Flow Probability Net Cash Flow
0.2 $6,000 0.2 $ 0
0.6 6,750 0.6 6,750
0.2 7,000 0.2 16,000

BPC has decided to evaluate the riskier project at a 11% rate and the less risky project at a 8% rate.

What is the expected value of the annual net cash flows from each project? Round your answers to nearest dollar.

Project A Project B
Net cash flow $ $

What is the coefficient of variation (CV)?

(to the nearest whole number) CV (to 2 decimal places)
Project A $
Project B $

What is the risk-adjusted NPV of each project? Round your answer to the nearest dollar.

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