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Unformatted text preview: a. Calculate the expected NPV for both projects. Can the question be resolved with this information alone? b. Calculate the variance and standard deviation of the NPVs for both projects. Which project appears to be riskier? c. Calculate the coefficient of variation for both projects. Does this change your opinion from part b? d. Calculate the probability of a negative NPV for both projects. e. Which project should be accepted? Worksheet: 537 CHAPTER 12: 0BRISK, CAPITAL BUDGETING, AND DIVERSIFICATION 538 Text Problem Solutions Formulas: Possible Answer : Accept Project B because it has the same expected NPV as Project A, but less risk....
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- Fall '09