NPV and Standard Deviation of a project

A 4-year project can be purchased for $10,000. Net cash benefits per year have an expected value of $4,000 and a standard deviation of $2,000. The required rate of return is 10%.

a) Expected NPV of the project.

b) Standard deviation of NPV assuming perfect correlation of cash flows.

c) Standard deviation of NPV assuming zero correlation of cash flows.

Solution Summary

The solution explains how to calculate the NPV and Standard Deviation of NPV a project