John Q.Enterprises is considering two potential investments.The probability distributions of annual end-of-year cash flows for the respective projects are: Both projects will require an initial outlay of $45,000 and will have an estimated life of 6 years.Project A is considered a riskier investment and will have to have a risk-adjusted required rate of return of 15%,while Project B's risk-adjusted required rate of return is 12%. a.Determine the expected value of each project's annual cash flow. b.Determine each project's risk-adjusted net present value.

Question

John Q.Enterprises is considering two potential investments.The probability distributions of annual end-of-year cash flows for the respective projects are:  Both projects will require an initial outlay of $45,000 and will have an estimated life of 6 years.Project A is considered a riskier investment and will have to have a risk-adjusted required rate of return of 15%,while Project B's risk-adjusted required rate of return is 12%. a.Determine the expected value of each project's annual cash flow. b.Determine each project's risk-adjusted net present value.

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The Answer of John Q.Enterprises is considering two potential investments.The probability distributions of annual end-of-year cash flows for the respective projects are:  Both projects will require an initial outlay of $45,000 and will have an estimated life of 6 years.Project A is considered a riskier investment and will have to have a risk-adjusted required rate of return of 15%,while Project B's risk-adjusted required rate of return is 12%. a.Determine the expected value of each project's annual cash flow. b.Determine each project's risk-adjusted net present value.

John QEnterprises Is Considering Two Potential Investments