Using the coefficient of variation criterion

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Two projects have the following expected net present values and standard deviations of net present values:

Project Expected Net Present Value Standard Deviation

A $50,000 $20,000

B $10,000 $7,000

a. Using the standard deviation criterion, which project is riskier?

b. Using the coefficient of variation criterion, which project is riskier?

c. Which criterion do you think is appropriate to use in this case? Why?

Reference no: EM13868426

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