Chapter 11

Expected annual cash flow = $7,650 Coefficient of variation: Project A: Project B: CVA = $474.34/$6,750 = 0.0703. CVB = $5,797.84/$7,650 = 0.7579. b. Project B is the riskier project because it has the greater variability in its probable cash flows, whether measured by the standard deviation or the coefficient of variation. ................
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