College Finance Level 1 - Risk & Management

please show your work

Mary Beth Clothes is considering opening an additional suburban outlet. An aftertax cash flow of $180 day expected value) is projected for each of the two locations being evaluated Site A Site B Cash Flows Cash Flows Probability 20 40 20 20 90 180 190 260 Probability .10 .30 .10 .30 20 $50 90 180 240 290 $180 Expected value $180 Expected value a. Compute the coefficient of variation for each site. (Do not round intermediate calculations. Round the final answers to 4 decimal places.) Coefficient of variation Site A Site B b. Which store site would you select based on the distribution of these cash flows? Use the coefficient of variation as your measure of risk. Site A Site B