Two mutually exclusive investment projects are under consideration. It is assumed that the cash flows are statistically independent random variables with means and variances estimated as follows: (a)...

Two mutually exclusive investment projects are under consideration. It is assumed that the cash flows are statistically independent random variables with means and variances estimated as follows:

(a) For each project, determine the mean and standard deviation for the PW
using an interest rate of 15%.
(b) From the results of part (a), which project would you recommend?

Extracted text: Project A Mean End of Year Variance -$5,000 1,000 1 $4,000 1,000? 2 $4,000 1,500? Project B Mean End of year Variance ニ -$10,000 2,000? 1 $6,000 1,500? $8,000 2,000