Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Risk and probability Micro Pub, Inc. is considering the purchase of one of two microllin camera, and Both should provide beneth over a 10-year period,

image text in transcribed
image text in transcribed
image text in transcribed
Risk and probability Micro Pub, Inc. is considering the purchase of one of two microllin camera, and Both should provide beneth over a 10-year period, and eachers an interest of 5,000 Management has constructed the following table of estimates of rates of return and probabilities for pessimistic, mostly and optimistic results Determine the range for the rate of return for each of the two camera b. Determine the value of the expected return for each camera Which camers purchase is Why? The range for the rate of verhum for camere Pound to the nearest while rumber) The range for thereof tum force (Round to meet the abo) Data Table 6. The value of the expected return for camera Round to two decima placa Click on the confocated on the home of the datatable below in orders.com The value of the speed return for camias Round so we decimal places) its content c. Which camera purchase is Why? (Select from the drop-down menus Camera Cameras Amount Probably Amount Probability The purchase of liker because it has range for the rate ofretum vestment 3000 100 55.000 1.00 Annue ofre Pess 021 16% 625 Mostly 205 0.41 294 051 One 33% 0.33 30% 024 205 Print Done Risk and probability Micro-Pub, Inc., is considering the purchase of one of two microfilm cameras, R and S Both should provide benefits over a 10-year period, and each requires an initial investment of $5,000. Management has constructed the following table of estimates of rates of return and probabilities for pessimisti most likely, and optimistic results. E!! - - X Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet) Camera R Amount Probability $5,000 1.00 Camera S Amount Probability $5,000 1.00 Initial investment Annual rate of return Pessimistic Most likely Optimistic 20% 28% 33% 0.21 0.41 0.38 16% 29% 30% 0.25 0.51 0.24 Risk and probability Micro-Pub, Inc., is considering the purchase of one of two microfilm cameras, R and S. Both should provide benefits over a 10-year period, and each requires an initial investment of $5,000. Management has constructed the following table of estimates of rates of return and probabilities for pessimistic, most likely, and optimistic results: a. Determine the range for the rate of return for each of the two cameras. b. Determine the value of the expected retum for each camera c. Which camera purchase is riskier? Why? a. The range for the rate of return for camera Ris%. (Round to the nearest whole number.) The range for the rate of return for camera Sis 1% (Round to the nearest whole number) b. The value of the expected return for camera Ris % (Round to two decimal places.) The value of the expected return for camera Sis 1% (Round to two decimal places.) c. Which camera purchase is riskier? Why? (Select from the drop-down menus.) The purchase of is riskier because it has a range for the rate of return

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Entrepreneurial Finance

Authors: J . chris leach, Ronald w. melicher

4th edition

538478152, 978-0538478151

More Books

Students also viewed these Finance questions

Question

What is a foreign currency future?

Answered: 1 week ago

Question

With what stage of personal power do you most identify? Explain.

Answered: 1 week ago

Question

What is Tax Planning?

Answered: 1 week ago