Explain the coefficient of variation cv and standard

Reference no: EM13387502

The San Diego LLC is considering a three-year project, Project A, involving an initial investment of $80 million and the following cash inflows and probabilities:

Describe your answer for each question in complete sentences, whenever it is necessary. Show all of your calculations and processes for the following points:

Describe and calculate Project A's expected net present value (ENPV) and standard deviation (SD), assuming the discount rate (or risk-free interest rate) to be 8%. What is the decision rule in terms of ENPV? What will be San Diego LLC's decision regarding this project? Describe your answer.

The company is also considering another three-year project, Project B, which has an ENPV of $32 million and standard deviation of $10.5 million. Project A and B are mutually exclusive. Which of the two projects would you prefer if you do not consider the risk factor? Explain.

Describe the coefficient of variation (CV) and the standard deviation (SD) in connection with risk attitudes and decision making. If you now also consider your risk-aversion attitude, as the CEO of the San Diego LLC will you make a different decision between Project A and Project B? Why or why not?

Reference no: EM13387502

Questions Cloud

A compute the contribution margin for each product b : sprint manufacturing company produces two products x and y. the following information is presented for both products x

A if the goal is to maximize gains how many bags of each : a small candy shop is preparing for the holiday season. the owner must decide how many bags of deluxe and how many bags

Why do people trade nbspwhen answering this question : why do people trade? nbspwhen answering this question consider the history of trade and how trade has influenced

Using the following information compute the unknown amounts : using the following information find the unknown amounts. assume each set of information is an independent case. a.

Explain the coefficient of variation cv and standard : the san diego llc is considering a three-year project project a involving an initial investment of 80 million and the

It usually engages in a long-term contract with these : xyz inc. is a large producer of chicken for grocery stores. it usually engages in a long-term contract with these

Find out the optimal stocking level for the turkey for the : demand for whole turkey at county market store during the thanksgiving break can be approximated by a normal

Recognition of concepts jim armstrong operates a small : recognition of concepts. jim armstrong operates a small company that books entershytainers for theaters parties

Give an example of a good practice for each of the : give an example of a good practice for each of the following preparing for an audio conference hosting an audio

User Account

All Pages