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PANDEYPRASHANT
Apr 25, 2009, 04:08 AM
two projects A&B costs 30000 and 36000. the NPV probability distribution for each projects is :


project a Project B
Npv estimate probablity Npv estimate probablity
3000 .1 3000 0.2
6000 .4 6000 0.3
12000 .4 12000 0.3
15000 .1 15000 0.2

your are required to compute
i) the expected Net Present Value of projects A and B
ii) the risk attached to each project i.e. Standard Devuatuion of each probablity distribution
iii) the profitability index of each project
which project do you consider more risky and why ?