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Bankability assessment
Assume that there are two comparable RE project finance transactions between which a bank can choose to provide financing to. Project A has an expected financial value (µ) of TEUR 900 and an uncertainty (σ) of 19%. Project B has an expected financial value (µ) of 820 TEUR and an uncertainty (σ) of 10%.
Which of the two do you think the bank will prefer, provided no problems have been identified in the bankability assessment of either project?
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