Delaying reduce the project coefficient of variation

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Reference no: EM131548032

The initial investment is $1,500. NPC has the opportunity to invest in a project that has a 75% chance of generating $500 per year for 7-years under good conditions or a 25% chance of generating $25 per year for 7-years. Assuming that all cash flows are discounted at 10%, calculate the effect of waiting on the project's risk, using the same data. By how much will delaying reduce the project's coefficient of variation? (Hint: Use the expected NPV.) A.2.23 B. 2.46 C. 2.70 D.2.97 E.3.27

Reference no: EM131548032

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