1- Kyle's Shoe Stores Inc. is considering opening an additional suburban outlet. An aftertax expected cash flow of $140 per week is anticipated from two stores that are being evaluated. Both stores have positive net present values.

Site ASite BProbabilityCash FlowsProbabilityCash Flows0.2800.2400.21400.1700.31500.21400.31700.41900.1210

a.Compute the coefficient of variation for each site.

2- Hooper Chemical Company, a major chemical firm that uses such raw materials as carbon and petroleum as part of its production process, is examining a plastics firm to add to its operations. Before the acquisition, the normal expected outcomes for the firm were as follows:

Outcomes

($ millions)ProbabilityRecession$100.2Normal economy500.4Strong economy700.4

Compute the expected value, standard deviation, and coefficient of variation prior to the acquisition.