Calculate the standard deviation for Franchise A

1. Start by calculating the deviations from the expected ROR for each projected ROR.
   1. In D4 write [=A4-$C$9]
   2. Drag the equation down to D8
   3. The $ signs tell excel to retain the same cell (C9) in each of the equations even while the other cell in the equation changes. In other words the $ signs anchor the cell.
2. Next, square the deviations
   1. In E4 write [=D4^2]
   2. Drag the equation down to E8
   3. The ^ sign means to the power of
3. Next calculate the variance
   1. In F4 write [=E4*B4]
   2. Drag the equation down to F8
4. Last, calculate the Standard deviation
   1. In F9 write [=SQRT(SUM(F4:F8))]
   2. This will sum the variance values and then squareroot the answer. Be careful with your parentheses. Make sure you know and use the order of operations.

1C) Calculate the Coefficient of Variation for Franchise A

5. In F10 write [=F9/C9]

1D) Copy all the work you have done so far to the columns to the right of the table

6. What happens when you increase the projected return of the first value in cell (A4)?
7. What happens if you make all the probabilities the same?