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