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Project coefficient of variation

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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: EM131318086

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