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

question 19

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.
$\text { Net Present Value }$
$\begin{array}{rrr}\text { Probability }&\text { Project A }&\text { Project B }\\0.25 & -\$ 5,000 & 0 \\0.50 & 4,000 & \$ 2,000 \\0.25 & 10,000 & 8,000\end{array}$
-The standard deviation for projects A and B are

• A) $4,210 and $2,104, respectively.
• B) $3,000 and $5,000, respectively.
• C) $5,356 and $3,000, respectively.
• D) $2,106 and $0, respectively.

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Definitions:

Palpation

The method of feeling with the hands and fingers during a physical examination to detect abnormalities within the body.

Percussion

A family of musical instruments played by striking them with the hand or a stick, or the act of tapping on a surface to diagnose the condition of the underlying structure in a body.

General Appearance

The overall look or external presentation of a person, which can be an indication of their health or condition.

Manipulation

The passive movement of a joint to determine the range of flexion and extension.