A locally owned restaurant is famous for making delicious burritos. The restaurant owners believe…

A locally owned restaurant is famous for making delicious burritos. The restaurant owners believe that their restaurant would do well in other college towns and is considering expanding operations to other locations. Each new location would require an initial investment of $6800. This investment will be depreciated on a straight line basis over the project’s 5 year life. The expansion is expected to produce annual cash inflows of $5900 in consecutive years over the life of the project beginning one year from today, while also producing annual cash outflows of $3000 in consecutive years over the life of the project, also beginning one year from today. What is the project’s NPV if the corporate tax rate is 34% and the project’s required rate of return is 9%?

B. The return on shares of the Orange Company are predicted under the following states of nature. The states of nature are all equally likely, and because there are a total of three states, each state has a 33.333% chance of occurring.
Recession -0.12
Normal +0.06
Boom +0.22
What is the standard deviation of Orange?