Items 1 and 2 are based on the following information: Assume that Reston Corp. is considering investing in a project. To evaluate the project, management has developed the following cash flow projections and related probabilities.
|
Present value of future cash flows |
Probability of occurrence |
|
$200,000 |
.4 |
|
$500,000 |
.3 |
|
$800,000 |
.3 |
What is the expected return for the project?
- $750,000
- $500,000
- $470,000
- $400,000
Assume that the standard deviation of the returns for the project is $150,000. What is the coefficient of variation for the project?
- .2345
- .3191
- .4256
- 1.10