College Finance Level1: Analyze Investment Risk (From textbook: Foundations of Financial Management, Authors: Block, hirt, ... 10th CANADIAN Edition)

Please solve this step by step as shown below ( Show/Explain your work)

a)

b) Which investment is preferred?

Sport Chek is the largest Canadian retailer of sporting clothing and sports equipment It is considering opening an additional suburban outlet. An after tax cash flow of $100 per day (expected value) is projected for each of the two locations being evaluated Which of these sites would you select based on the distribution of these cash flows? (Use the coefficient of variation as your measure of risk.) Site A Vaughan Mills Site B Heartland Town Centre Probability Cash Flows $50 100 110 135 0.20 0.30 0.30 0.20 Probability Cash Flows $20 50 100 150 180 $100 0.10 0.20 0.40 0.20 0.10 Expected value $100 Expected value