The Bartram-Pulley Company (BPC) must decide between two mutually exclusive investment projects. Each project costs $5,250...

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The Bartram-Pulley Company (BPC) must decide between two mutually exclusive investment projects. Each project costs $5,250 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 B Project A O Cash Flows $5,000 6,750 7,000 BPC has decided to evaluate the riskier project at a 13% rate and the less risky project at a 10% 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 Project A: S $ What is the coefficient of variation (CV)? (Hint: 0-$6,890.21 and CVs $0.84.) Do not round intermediate calculations. Round o values to the nearest cent and CV values to two decimal places. $ Probability 0.2 0.6 0.2 σ 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. $ Probability 0.2 0.6 0.2 Cash Flows S 0 6,750 21,000 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? The Bartram-Pulley Company (BPC) must decide between two mutually exclusive investment projects. Each project costs $5,250 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 B Project A O Cash Flows $5,000 6,750 7,000 BPC has decided to evaluate the riskier project at a 13% rate and the less risky project at a 10% 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 Project A: S $ What is the coefficient of variation (CV)? (Hint: 0-$6,890.21 and CVs $0.84.) Do not round intermediate calculations. Round o values to the nearest cent and CV values to two decimal places. $ Probability 0.2 0.6 0.2 σ 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. $ Probability 0.2 0.6 0.2 Cash Flows S 0 6,750 21,000 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?

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a To calculate the expected value of the annual cash flows from each project we multiply the cash fl... View the full answer