Consider the case of another company. Kim Printing is evaluating two mutually exclusive projects. They both require a $1 million investment today and have expected NPVS of $200,000. Management conducted a full risk analysis of these two projects, and the results are shown below. Risk Measure Project A Project B Standard deviation of project's expected NPVS $80,000 $120,000 Project beta 0.9 1.1 Correlation coefficient of project cash flows (relative to the firm's existing projects) 0.7 0.9 Which of the following statements about these projects' risk is correct? Check all that apply. O Project A has more corporate risk than Project B. O Project B has more corporate risk than Project A. O Project B has more market risk than Project A. O Project B has more stand-alone risk than Project A.
Consider the case of another company. Kim Printing is evaluating two mutually exclusive projects. They both require a $1 million investment today and have expected NPVS of $200,000. Management conducted a full risk analysis of these two projects, and the results are shown below. Risk Measure Project A Project B Standard deviation of project's expected NPVS $80,000 $120,000 Project beta 0.9 1.1 Correlation coefficient of project cash flows (relative to the firm's existing projects) 0.7 0.9 Which of the following statements about these projects' risk is correct? Check all that apply. O Project A has more corporate risk than Project B. O Project B has more corporate risk than Project A. O Project B has more market risk than Project A. O Project B has more stand-alone risk than Project A.
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 24P
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