# Expected value, standard deviation,coefficient of variation

A firm is considering two alternative projects. Project A needs an investment of $800,000. Project B needs an investment of $750,000. Relevant annual cash flow data for the two projects over their expected seven-year lives are as follows:

Project A Project B

Pr. Cash Flow Pr. Cash Flow

0.50 $ 0 0.045 $ 0

0.50 500,000 0.910 200,000

0.045 400,000

Calculate the expected value, standard deviation, and coefficient of variation of cash flows for each project.

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#### Solution Preview

Expected value = Sum (Probability X Cash Flow)

Standard Deviation = Square root(Sum(Expected value - cash flow)^2XProbability)

Coefficient of variation = ...

#### Solution Summary

The solution explains the calculation of expected value, standard deviation, and coefficient of variation

Expected value;standard deviation;coefficient of variation

Problems involve:

expected value

standard deviation

coefficient of variation

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fv

pva

fva

(see attached)

I need these problems done using excel and showing how the answers were calculated. The answers are at the end of the attached problem set.

I need the formulas to each problem in an EXCEL spreadsheet as well as explanations as to what the answers mean in the context of the problem.

Describe and justify each assumption you have made

Explain, support and justify every statement you make

Support your conclusions with evidence such as facts and statistics from reliable sources, or a well-reasoned logical argument.

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