Two projects have the following expected net present values and standard deviations of net present values:
|
Project
|
Expected Net Present Value
|
Standard Deviation
|
|
A
|
$ 50,000
|
$ 20,000
|
|
B
|
10,000
|
7,000
|
a. Using the standard deviation crieterion,which project is riskier?
b. Using the cofficient of variation criterion, which project is riskier?
c. Which criterion do you think is appropriate to use in this case? why?