Question
Macro-Micro Brew Pub is considering the purchase of one of two hops brew roasters less filling or tastes great. Both should provide a benefit over
Macro-Micro Brew Pub is considering the purchase of one of two hops brew roasters less filling or tastes great. Both should provide a benefit over a 10 year period and each requires an investment of $125,000. Looking at the following table which includes estimates of rates of return, probabilities for pessimistic, most likely and optimistic results.
| Hopster A Less Filling | Hopster B Tastes Great | ||
Investment | Amount | Probability | Amount | Probability |
| $125,000 | 1.00 | $125,000 | 1.00 |
Rate of Return |
|
|
|
|
Pessimistic | 15% | .30 | 10% | .50 |
Likely | 18% | .30 | 14% | .25 |
Optimistic | 20% | .40 | 18% | .25 |
11) Range of rate of return
12) Expected Return?
13) Standard Deviation?
14) Best option?
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