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Kyles Shoe Stores Inc. is considering opening an additional suburban outlet. An aftertax expected cash flow of $140 per week is anticipated from two stores
Kyles Shoe Stores Inc. is considering opening an additional suburban outlet. An aftertax expected cash flow of $140 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 | ||||||||||||
0.1 | 90 | 0.2 | 30 | ||||||||||||
0.3 | 140 | 0.2 | 70 | ||||||||||||
0.4 | 150 | 0.1 | 140 | ||||||||||||
0.2 | 145 | 0.3 | 180 | ||||||||||||
0.2 | 260 | ||||||||||||||
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.
multiple choice
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Site A
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Site B
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