Reference no: EM132530988
1. There are two projects, A and B. the following probability distribution for the projects are given below
A B
______________ ______________
Initial Investment $9,000 $9,000
Annual rate of return
Return Prob. Return Prob.
_____ _____ ______ ____
Pessimistic 9% 0.25 11% 0.30
Most Likely 15 0.50 18 0.45
Optimistic 25 0.25 23 0.25
a. Compute expected rate of return for each project.
b. Compute variance and standard deviation of rate of return for each project.
c. compute the coefficient of variance.
c. Which project should you take?