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Kyles Shoe Stores Inc. is considering opening an additional suburban outlet. An aftertax expected cash flow of $120 per week is anticipated from two stores
Kyles Shoe Stores Inc. is considering opening an additional suburban outlet. An aftertax expected cash flow of $120 per week is anticipated from two stores that are being evaluated. Both stores have positive net present values.
Site A | Site B | ||||||||||||||
Probability | Cash Flows | Probability | Cash Flows | ||||||||||||
.2 | 60 | .2 | 30 | ||||||||||||
.2 | 120 | .1 | 60 | ||||||||||||
.3 | 130 | .2 | 120 | ||||||||||||
.3 | 150 | .2 | 150 | ||||||||||||
.3 | 180 | ||||||||||||||
a. Compute the coefficient of variation for each site. (Do not round intermediate calculations. Round your answers to 3 decimal places.)
b. Which store site would you select based on the distribution of these cash flows? Use the coefficient of variation as your measure of risk.
Site A | |
Site B |
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