Assume a $290,000 investment and the following cash flows for two products:

Year Product X Product Y 1 $ 100,000 $ 90,000 2 100,000 100,000 3 75,000 80,000 4 40,000 40,000

(a) Calculate the payback for products X and Y. (Round your answers to 2 decimal places.)

Payback period Product X = years

Product Y = years (

b) Which alternative would you select under the payback method?

Product XProduct Y

Wildcat Oil Company was set up to take large risks and is willing to take the greatest risk possible. Richmond Construction Company is more typical of the average corporation and is risk-averse.

Projects Returns:

Expected value Standard

deviation A $ 262,000 $ 212,000 B 735,000 422,000 C 183,000 156,000 D 139,000 246,000

(a-1) Compute the coefficients of variation. (Round your answers to3decimal places.)

Coefficient of variation

Project A

Project B

Project C

Project D