I just need help with #4 but here's the rest of the information.
Figure 2 CELESTIAL ENTERPRISES, INC in the sand Restaurant Size Level of Demand Outcomes NV Standard Expanded Management believed that restaurants with a capacity of 144 persons would be more profitable than the present size of. The company faced two choice continuing with the smaller sire units of going to the larger size. The initial cost for five smaller restaurants was 52.1 million, and it was $3.7 million for five larger ones. Demand expectations over the years were 40 percent for high demand, 40 percent for medium demand, and 20 percent for low demand. The net present values of cash flows for the two proposals are given in Figure 2. Juan T. Gutierrez had been president and chief executive officer of Celestial Enterprises Ine, since July of 2005. Prior to that time, he had worked for a competitor. He knew the decision concerning the size of new restaurants could be a major turning point for the company. Me Gutierre wondered if the potential higher returns for the larger units justified the increased risk In any event, the strategy would have to be sold to the board of directors REQUIRED: Provide a critical response to the questions posed. Please submit the assignment via Turnitin in the Moodle class via the link labeled Final Project Submission 1. Determine the expected value of the net present value for the standard-size restaurants. Use the data in Figure 2. To get the expected value, multiply the outcomes (NPV) times the appropriate probability ( 40 for high demand, etc.). Do this for high demand, medium demand, and low demand, and sum to answer this question. Remember to state your final answer in thousands (15 points) Celestial Enterprises Inc 2 Follow the same procedure for the expanded-sire restaurants to arrive at the expected value of the met present value (15 points) 3. Which alternate appears to be the more desirable? Why? (15 points) 4. Next, determine the standard deviation for the standard size restaurants. Remember to state your final answer in thousands. The standard deviation for the expanded-size restaurant is 51.415.00. Now determine the coefficient of variation for the two alternatives. (15 points) 5. Based on the coefficient of variation, which of the two alternatives is more desirable? Comment on the relationship of your answer to question 3 and your answer to this question. What general principle is being demonstrated? Be expansive in your answer. (20 points) 6. Assume, in addition to considering the building of five restaurants that are all standard or all expanded, Celestial evaluates possible combinations of the two. The following values will apply for the expected values and the standard deviations