Problem 13-12 (Algo) Coefficient of variation and investment decision [LO13-1] Karamo's Shoe Stores Incorporated is considering opening an additional suburban outlet. An aftertax expected cash flow of $140 per week is anticipated from two stores that are being evaluated. Both stores have positive net present values. Probability 0.2 0.2 0.3 0.3 Site A Site B Site A Cash Flows O Site A O Site B Probability 0.2 0.1 0.2 0.4 0.1 a. Compute the coefficient of variation for each site. Note: Do not round intermediate calculations. Round your answers to 3 decimal places. Coefficient of Variation Site B 5.80 140 150 170 Cash Flows. $ 40 70 140 190 210 b. Which store site would you select based on the distribution of these cash flows? Use the coefficient of variation as your measure of risk.
Cost of Debt, Cost of Preferred Stock
This article deals with the estimation of the value of capital and its components. we'll find out how to estimate the value of debt, the value of preferred shares , and therefore the cost of common shares . we will also determine the way to compute the load of every cost of the capital component then they're going to estimate the general cost of capital. The cost of capital refers to the return rate that an organization gives to its investors. If an organization doesn’t provide enough return, economic process will decrease the costs of their stock and bonds to revive the balance. A firm’s long-run and short-run financial decisions are linked to every other by the assistance of the firm’s cost of capital.
Cost of Common Stock
Common stock is a type of security/instrument issued to Equity shareholders of the Company. These are commonly known as equity shares in India. It is also called ‘Common equity
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![Problem 13-12 (Algo) Coefficient of variation and investment decision [LO13-1]
Karamo's Shoe Stores Incorporated is considering opening an additional suburban outlet. An aftertax expected cash flow of $140 per
week is anticipated from two stores that are being evaluated. Both stores have positive net present values.
Probability
0.2
0.2
0.3.
0.3
Site A
Site B
Site A
Cash Flows
O Site A
O Site B
$ 80
140
150
170
Coefficient of
Variation
Probability
0.2
0.1
9.2
Site B
0.4
0.1
a. Compute the coefficient of variation for each site.
Note: Do not round intermediate calculations. Round your answers to 3 decimal places.
Cash Flows
$ 40
70
140
198
210
b. Which store site would you select based on the distribution of these cash flows? Use the coefficient of variation as your measure of
risk.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F245f0205-cf64-4e7b-b7c8-eb5e5da979b8%2F6f47ea3a-1729-407a-be8f-9f688fcfb143%2F7bxpkau_processed.jpeg&w=3840&q=75)
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