You are a risk manager for a construction company and you need to estimate the risk associated
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Question:
You are a risk manager for a construction company and you need to estimate the risk associated with a new project. The project requires an investment of $1,500,000 and is expected to generate a net cash flow of $300,000 per year for 8 years. However, there is some uncertainty around the cash flow projections due to market risk. The standard deviation of the project's net cash flow is estimated to be $100,000. The company's cost of capital is 10%. Calculate the expected net present value (NPV) of the project and assess the risk associated with the project.
Related Book For
Engineering Economic Analysis
ISBN: 9780195168075
9th Edition
Authors: Donald Newnan, Ted Eschanbach, Jerome Lavelle
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