A Firm Is Evaluating the Relative Riskiness of Two Capital $\text { Net Present Value }$

question 59

Multiple Choice

A firm is evaluating the relative riskiness of two capital budgeting projects. The following table summarizes the net present values and associated probabilities for various outcomes for the two projects.
$\text { Net Present Value }$

$\begin{array}{rrr}\text { Probability }&\text { Project A }&\text { Project B }\\\hline 0.25 & -\$ 5,000 & 0 \\0.50 & 4,000 & \$ 2,000 \\0.25 & 10,000 & 8,000\end{array}$


-The coefficient of variations for projects A and B are

• A) 0.6 and 1, respectively.
• B) 0.8 and 2, respectively.
• C) 1.2 and 1.5, respectively.
• D) 1.6 and 1, respectively.

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Definitions:

Listening

The active process of receiving, comprehending, and interpreting spoken or non-verbal messages.

Misinterpret

To understand or interpret something incorrectly, leading to a misunderstanding of the intended meaning.

Rightsizing

The process of adjusting the size of a company's workforce to its needs, aiming for optimal efficiency and productivity.

Layoff

The act of temporarily or permanently terminating employees, typically due to economic downturns or company restructurings.