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Mr. John Backster, a retired executive, desires to invest a portion of his assets in rental property. He has narrowed his choices to two apartment
Mr. John Backster, a retired executive, desires to invest a portion of his assets in rental property. He has narrowed his choices to two apartment complexes, Windy Acres and Hillcrest Apartments. The anticipated annual cash inflows from each are as follows: Windy Acres Yearly Aftertax Cash Probability Inflow $90,000 0.2 95,000 0.2 110,000 0.2 125,000 130.000 0.2 Hillcrest Apartments Yearly Aftertax Cash Probability Inflow $95,000 0.2 100,000 0.3 110,000 120.000 0.1 REQUIRED: a) Find the expected value of the cash flow for each apartment complex. b) What is the coefficient of variation for each apartment complex? c) Which apartment complex has more risk? Explain your
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