Karamo's Shoe Stores Incorporated is considering opening an additional suburban outlet. An aftertax expected cash flow of $160 perweek is anticipated from two stores that are being evaluated. Both stores have positive net present values.Probability0.20.20.30.3Site ASite BSite ACashSite AO Site BFlowS$ 70160170210Probability0.10.20.20.40.1a. Compute the coefficient of variation for each site.Note: Do not round intermediate calculations. Round your answers to 3 decimal places.Site BCoefficient ofVariationCash FlowS$ 5080160210230b. Which store site would you select based on the distribution of these cash flows? Use the coefficient of variation as your measure ofrisk.

Coefficient of variation shows the relative measurement of the standard deviation with its mean…

Karamo's Shoe Stores Incorporated is considering opening an additional suburban outlet. An aftertax expected cash flow of $160 per week is anticipated from two stores that are being evaluated. Both stores have positive net present values. Probability 0.2 8.2 0.3 0.3 Site A Site A Site B Cash Flows Probability 0.1 0.2 0.2 0.4 0.1 a. Compute the coefficient of variation for each site. Note: Do not round intermediate calculations. Round your answers to 3 decimal places. Coefficient of Variation Site B $70 160 170 210 Cash Flows $ 50 80 160 210 230 b. Which store site would you select based on the distribution of these cash flows? Use the coefficient of variation as your measure of risk.

Karamo's Shoe Stores Incorporated is considering opening an additional suburban outlet. An aftertax expected cash flow of $160 per week is anticipated from two stores that are being evaluated. Both stores have positive net present values. Probability 0.2 8.2 0.3 0.3 Site A Site A Site B Cash Flows Probability 0.1 0.2 0.2 0.4 0.1 a. Compute the coefficient of variation for each site. Note: Do not round intermediate calculations. Round your answers to 3 decimal places. Coefficient of Variation Site B $70 160 170 210 Cash Flows $ 50 80 160 210 230 b. Which store site would you select based on the distribution of these cash flows? Use the coefficient of variation as your measure of risk.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter11: Capital Budgeting And Risk

Section: Chapter Questions

Problem 24P

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