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Karens Shoe Stores Inc. is considering opening an additional suburban outlet. An aftertax expected cash flow of $170 per week is anticipated from two stores
Karens Shoe Stores Inc. is considering opening an additional suburban outlet. An aftertax expected cash flow of $170 per week is anticipated from two stores that are being evaluated. Both stores have positive net present values.
a. Compute the coefficient of variation for each site
b. Which store site would you select based on the distribution of these cash flows?
Site A | Site B | ||||||||||||||
Probability | Cash Flows | Probability | Cash Flows | ||||||||||||
.2 | 90 | .1 | 50 | ||||||||||||
.2 | 170 | .2 | 90 | ||||||||||||
.2 | 190 | .2 | 170 | ||||||||||||
.4 | 200 | .2 | 220 | ||||||||||||
.3 | 230 |
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