Calculate the variance and standard deviation

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Reference no: EM1311071

A company is considering between two projects: project 1 and project 2. The estimated cash flows and their probabilities of the two projects are given below.

Project 1

Project 2

Cash inflow

Probability

Cash inflow

Probability

$3,000

0.10

$2,000

0.10

4,000

0.20

3,500

0.25

5,000

0.40

5,000

0.30

6,000

0.20

6,500

0.25

7,000

0.10

8,000

0.10

  1. Calculate the expected value (revenue) from each project.
  2. Calculate the variance and standard deviation of the expected value from each project.
  3. Calculate the coefficient of variation of each project, and determine which project should the company choose.

Reference no: EM1311071

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