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Suppose there are two projects experiencing the following cash flows: Project A...

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Accounting

Suppose there are two projects experiencing the following cash flows:

Project A Project B
Probability Cash Flows Probability Cash Flows
0.2 6000 0.2 0
0.6 6750 0.6 6750
0.2 7500 0.2 18000

a) Calculate the Expected Annual Cash Flow for each project.

b) Given that Project A has a standard deviation of 474 and Project B has a standard deviation of 5797, find the coefficient of variation of each project.

c) Why might a firm pick Project A over B here?

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