Karamo's Shoe Stores Incorporated is considering opening an additional suburban outlet. An aftertax expected cash flow of $180 per week is anticipated from two stores that are being evaluated. Both stores have positive net present values. Probability 0.1 0.3 0.3 0.3 Site A Site A Site B Cash Flows $ 90 180 170 220 Probability 0.1 0.3 0.3 0.1 0.2 Coefficient of Variation Site B Cash Flows $ 50 70 180 a. Compute the coefficient of variation for each site. Note: Do not round intermediate calculations. Round your answers to 3 decimal places. 230 290 b. Which store site would you select based on the distribution of these cash flows? Use the coefficient of variation as your measur risk. Activate Win
Karamo's Shoe Stores Incorporated is considering opening an additional suburban outlet. An aftertax expected cash flow of $180 per week is anticipated from two stores that are being evaluated. Both stores have positive net present values. Probability 0.1 0.3 0.3 0.3 Site A Site A Site B Cash Flows $ 90 180 170 220 Probability 0.1 0.3 0.3 0.1 0.2 Coefficient of Variation Site B Cash Flows $ 50 70 180 a. Compute the coefficient of variation for each site. Note: Do not round intermediate calculations. Round your answers to 3 decimal places. 230 290 b. Which store site would you select based on the distribution of these cash flows? Use the coefficient of variation as your measur risk. Activate Win
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 1PA: Your company is planning to purchase a new log splitter for is lawn and garden business. The new...
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