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Question three. Hollywood Cinema is considering the purchase of one of two microfilm cameras, Camera R and Camera S. Both should provide benefits over a

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Question three. Hollywood Cinema is considering the purchase of one of two microfilm cameras, Camera R and Camera S. Both should provide benefits over a 10-year period, and each requires an initial investment of $4,000. Management has constructed the accompanying table of estimates of rates of return and probabilities for pessimistic, most likely, and optimistic results. Camera R Amount Probability $4000 1.00 Camera S Amount $4000 Probability 1.00 Initial Investment Annual rate of return Pessimistic Most likely Optimistic 20% 0.20 0.25 0.50 0.25 25% 30% 15% 25% 35% 0.55 0.25 a. Determine the range for the rate of return for each of the two cameras. b. Determine the expected value of return for each camera. c. Compute their standard deviations d. Purchase of which camera is riskier and why

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