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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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