Consider the following Plan A and Plan B of a corporation. The company's manager is a risk averse person. Based on the coefficient of variation, which plan the company will accept if the plans are mutually exclusive? Plan A Plan Bd Dollar Sales Revenues Net Pre-Tax Operating Operating Profit after Profit Taxes (EBIT) INOPAT ROIC Total Operating Units Sold Net Pre-Tax Operating Operating Profit after Profit Taxes EBIT (NOPATI Total Operating Costs ROIC Demand Probability Torrible 0.05 0 $ 0 $ 20,000 $120,000) $12,000 -6.0% $ 80,000 $160,000) $ (36,000 -18.0% Poor 0.20 40.000 80,000 80,000 0 0 00 100,000 120,000) (12.000) -6.0 Normal 0.50 100,000 200,000 170,000 30,000 18,000 00 160,000 40,000 24,000 12.0 Good 0.20 160,000 320,000 260,000 60.000 36,000 180 220,000 100.000 60,000 30.0 Wonderful 0.05 200,000 400,000 320.000 80,000 29,000 24.0 260,000 140.000 84,000 42.0 Expected 100,000 $200,000 $170,000 $30,000 $ 18,000 90% $160,000 $ 40,000 $ 24,000 120% value Standard $ 24,898 7.4% $ 49.396 14.8% deviation: Coelicient 0.82 0.82 1.23 1.23 of variation ROIC - Return on invested capital Price per un S2 Notes Operating costs Variable costs + Foxed costs. VCCAT SIVC 8) = 0 The fox rate is 40%, 30 NOPATEBITE1 - Tox role) - EBIT(0.6) FCA) $20.000, FC) - $60,000 Tax 40 Capital (Ar) $200,000 ROIC - NOPAT/Copol The broken sales level for Plan B is not shown in the table, but it is 60.000 unit of $120,000 The expected volue, standard deviations, and coolicienhof variation were found using the procedures discussed in Chapter 7 Question 6 options: Plan A Neither Plan A nor Plan B Plan B Both Plan A and Plan B