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Global Systems Ltd is considering market diversification. Use the following information, determine which, if any, of the three proposed diversification are acceptable investments, (a) Market
Global Systems Ltd is considering market diversification. Use the following information, determine which, if any, of the three proposed diversification are acceptable investments, (a) Market A Market B Market C $60,000,000 $30,000,000 10 years 7 years 10 years Required investment $50,000,000 Expected life Expected annual after- 4,000,000 tax returns 9,000,000 7,000,000 500,000 4,000,000 Estimated standard deviations of return 2,000,000 (b) Required rates of return on company investments less than 0.2 0.2 to 0.4 Above 0.4 to 0.55 above 0.55 Coefficient of variation 9% 11% 13% 15% Required rate of return
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