Two Projects Have the Following NPVs and Standard Deviations Which of the Two Projects Is More Risky

question 1

Essay

Two projects have the following NPVs and standard deviations:
$\begin{array} { l c c } & \text { Project } A & \text { Project } B \\\text { NPV } & 200 & 300 \\\text { Standard deviation } & 75 & 100\end{array}$
Which of the two projects is more risky?

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Definitions:

Fixed Costs

Expenses that do not change with the level of goods or services produced by the business over the short term.

Product Cost Concept

The accounting principle that determines the cost of a product by adding the costs of raw materials, labor, and overhead incurred in its production.

Rate of Return

The increase or decrease in the value of an investment during a certain timeframe, represented as a percentage of the original investment's cost.

Markup Percentage

The percentage added to the cost of goods to cover overhead and profit, determining the selling price.