Question
Atomic Blaster Bean Company is considering the purchase of one of bodacious bean burners Hickory Honey or Bean-tastic burner. Both should provide a benefit over
Atomic Blaster Bean Company is considering the purchase of one of bodacious bean burners Hickory Honey or Bean-tastic burner. Both should provide a benefit over a 10 year period and each requires an investment of $450,000. Looking at the following table which includes estimates of rates of return, probabilities for pessimistic, most likely and optimistic results.
| Hickory Honey | Bean-tastic Burner | ||
Investment | Amount | Probability | Amount | Probability |
| $450,000 | 1.00 | $450,000 | 1.00 |
Rate of Return |
|
|
|
|
Pessimistic | 10% | .10 | 7% | .30 |
Likely | 14% | .70 | 14% | .40 |
Optimistic | 19% | .20 | 21% | .30 |
15) Range of rate of return
16) Expected Return?
17) Standard Deviation?
18) Best option?
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