The Totally Tubular Tube Company wishes to evaluate three new investment proposals. The firm is concerned with the impact of the proposals on its total risk. Consequently, it has determined expected values and standard deviations of the probability distributions of possible net present values for the possible combinations of existing projects, E, and investment proposals under consideration:

Which combination do you feel is most desirable? Which proposals should be accepted? Which should be rejected?

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EXPECTED VALUE OF NET PRESENT VALUE IN MILLIONS) 6.50 6.80 7.60 7.20 7.90 7.50 8.30 8.60 STANDARD DEVIATION (IN MILLIONS) COMBINATION E+I E+2 E+3 E+1+2 E+1+3 E+2+3 E+1+2+3 5.00 8.00 6.50 7.50 5,60 9,00