In the previous problem you were asked to find the expected NPV of a project TWI is considering. Use the same data to calculate the project's coefficient of variation. (Hint: Use the expected NPV as found in Problem 40.)
A) 5.87
B) 6.52
C) 7.25
D) 7.97
E) 8.77

Question

Quizplus · Accepted Answer

To calculate the coefficient of variation (CV), we need to divide the standard deviation by the expected value of NPV and multiply by 100 to express it as a percentage.

From the previous problem, we know that the expected NPV of the project is $39,960,000 and the standard deviation is $2,902,691.

Therefore, the CV is:

CV = (2,902,691 / 39,960,000) x 100
CV = 0.0725 x 100
CV = 7.25

So the answer is (C) 7.25.

In the Previous Problem You Were Asked to Find the Expected