You are considering two mutually exclusive projects with the following cash flows:

		Projected cash flows
	Probabilities	Project A	Project B
Investment required	1.0	$150,000	$180,000
Annual cash flows and probabilities of occurrence for each of five years	0.3	$35,000	$45,000
	0.5	$40,000	$55,000
	0.2	$50,000	$67,000

(b) Compute the variance of NPW distribution for Project B using i=12%. Assume that project cash flows are mutually independent.

You are considering two mutually exclusive projects with the following cash flows: Projected cash flows Probabilities Project B Project A $150,000 Investment required 1.0 $180,000 0.3 $35,000 $45,000 Annual cash flows and probabilities of occurrence for each of five years 0.5 $40,000 $55,000 0.2 $50,000 $67,000 (b) Compute the variance of NPW distribution for Project B using i=12%. Assume that project cash flows are mutually independent. You are considering two mutually exclusive projects with the following cash flows: Projected cash flows Probabilities Project B Project A $150,000 Investment required 1.0 $180,000 0.3 $35,000 $45,000 Annual cash flows and probabilities of occurrence for each of five years 0.5 $40,000 $55,000 0.2 $50,000 $67,000 (b) Compute the variance of NPW distribution for Project B using i=12%. Assume that project cash flows are mutually independent