Assume you are risk-averse and have the following three choices. Standard Deviation Project A B C Expected Value $ 2,520 2,930 2,480 a. Compute the coefficient of variation for each. Note: Round your answers to 3 decimal places. Project $ 1,420 1,050 1,040 A B C Coefficient of Variation b. Which project will you select? O Project C Project A O Project B

Assume you are risk-averse and have the following three choices. Standard Deviation Project A B C Expected Value $ 2,520 2,930 2,480 a. Compute the coefficient of variation for each. Note: Round your answers to 3 decimal places. Project $ 1,420 1,050 1,040 A B C Coefficient of Variation b. Which project will you select? O Project C Project A O Project B

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 23P: In Problem 22, if P(s1) = 0.25, P(s2) = 0.50, and P(s3) = 0.25, find a recommended decision for each...

See similar textbooks

Similar questions

A public decision-maker has a budget of $30m which must be spent in the current year. Three independent and indivisible projects were proposed. Each project has a 5 years life. The following table lists the capital cost of each project and their respective annual benefits. The discount rate is 10%. Initial capital costs 12m 10m 17m ANNUAL Benefits 4.3m 4.2m 5.8m Projects A (school) B (Hospital) C (Road) a. List the possible combinations of projects, given the above budget
Assume you are risk-averse and have the following three choices Expected Value $ 2,200 Standard Deviation $ 1,440 Project A B C 2,730 2,250 Project A B C 1,960 1,490 a. Compute the coefficient of variation for each. Note: Round your answers to 3 decimal places. Coefficient of Variation b. Which project will you select? O Project A O Project B O Project C
Compute the Profitability Index (PI) for each project? Project A Project B Profitability Index (PI) 5- In light of your answers above, suppose that these two projects might be mutually exclusive or independent. According to these two assumptions, fill in the blanks in the table below with the suitable answer: Points Investment Criteria If A and B are mutually exclusive, then I would select If A and B are independent, then I would select PBP NPV IRR PI
Can you have an investment with DCFRR > MARR, but NPV $0 (calculating NPV with iTyM=MARR)? Can you have an investment with DCFRR < MARR, and NPV < $0 (calculating NPV with iTyM=MARR)?
2. There are two projects, X and Y. the following probability distribution for the projects are given below PROJECT X PROJECT Y Return Prob. Return Prob. Pessimistic 8% 0.25 7% 0.35 Most Likely 16 0.50 13 0.45 Optimistic 21 0.25 22 0.20 Which project should you take based on Risk and Return?why?
State the decision criteria for each of the following. (2) PI > MIRR > NPV > IRR > options; 0 1 PI MIRR NPV IRR Payback
n 0 1 2 3 4 5 6 7 8 9 10 A -$250 $60 $970 B -$200 $90 $90 $60 $60 Net Cashflow с -$70 $20 $10 $5 -$50 $60 $50 $40 $30 $20 $10 D -$300 $270 $250 -$129 -$20 $120 $40 E -$90 -$100 -$50 $0 $150 $150 $100 $100
1- Please name the goals of models. 2- Please define risky project. 3- Please name two Criteria for evalu...ng pject decisions. 4- Please define the value of information about projects. 5- Are you agree with the phrase(sentence): "The indifference (exchange) risk - retur curve slop of a risk aversion has a negative slop."? explain why? (4)
QUESTION 5 Invest in any or all of the four projects whose relevant cash flows are given in the following table. The firm has RM7,000,000 budgeted to fund these projects, all of which are known to be acceptable. Initial investment for each project is the same for all projects which is RM1,600,000. The rate of return for all projects is equivalent to 8%. Operating cash outflow Project X Year 1 Project Y Cash Outflow RM1,600,000 (for each project) Operating Cash Inflows RM 440,000 RM 140,000 1 340,000 220,000 (110,000) ( 95,000 ) 105,000 220,000 388,000 180,000 250,000 260,000 370,000 460,000 3. 4. 5. 6. 7. 8. 9. Use this table for PROJECT X and Y Period PVIF 8% 1 0.9259 2 0.8573 3 0.7938 4 0.7350 0.6806 6 0.6302 7 0.5835 8 0.5403 9 0.5002 10 0.4632 8
Consider the following payoff table: DA: Decision Alternative. Decision Alternative Good Bad Probabilities State of Nature 0.6 DA1 -3.22 DA2 13.80 DA3 3.75 DA4 4.06 6.33 What is the Expected value under perfect Information (EVUPI)? (Please keep 2 decimals for your answer) Your Answer: Answer 0.4 5.21 -5.40 6.00
Use attachment to answer question q3- This question relates to the diagram, which shows the NPV profile for Projects X and Y. What is the Internal Rate of Return of Project X? Select one: a. 13% b. 9% c. 4% d. 10%
What would you recommend if the benefit / cost ratio is >1: Select one: a. Benefit/cost ratio always =1 b. The project must be rejected. c. Benefit / cost ratio cannot be >1 d. The project must be accepted