What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.) b. What is the standard deviation of unit sales?
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Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Myers Business Systems is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given next:
| Possible Market Reaction | Sales in Units | Probabilities | ||||
| Low response | 30 | 0.10 | ||||
| Moderate response | 40 | 0.10 | ||||
| High response | 55 | 0.20 | ||||
| Very high response | 65 | 0.60 | ||||
a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.)
b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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- Sampson Corp. is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are shown next: PossibleMarket Reaction Salesin Units Probabilities Low response 60 0.20 Moderate response 80 0.30 High response 100 0.30 Very high response 120 0.20 a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.) b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.)Sampson Corp. is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are shown next: Possible Market Reaction Sales in Units Probabilities Low response 80 0.20 Moderate response 90 0.30 High response 110 0.10 Very high response 140 0.40 a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.) b. What is the standard deviation of unit sales?Myers Business Systems is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given next: Possible Market Reaction Low response Moderate response High response Very high response Expected value Sales in Units 35 45 60 a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.) Standard deviation Probabilities 0.30 0.20 0.20 0.30 units b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.) units
- Myers Business Systems is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given next: Possible Market Reaction Sales in Units Probabilities Low response 25 0.20 Moderate response 30 0.10 High response 50 Very high response 70 0.10 0.60 a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.) Expected value units b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Standard deviation unitsSampson Corporation is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are shown next: Possible Market Reaction Low response Moderate response High response Very high response Sales in Units 40 Probabilities 0.30 70 0.20 90 120 0.20 0.30 a. What is the expected value of unit sales for the new product? Note: Do not round Intermediate calculations and round your answer to the nearest whole unit.) Answer is complete but not entirely correct. Expected value 70 units b. What is the standard deviation of unit sales? Note: Do not round Intermediate calculations. Round your answer to 2 decimal places. Answer is complete but not entirely correct. Standard deviation 19.24 unitsSampson Corp. is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are shown next: Possible Sales Market Reaction in Units Probabilities Low response Moderate response High response Very high response 60 0.10 70 0.30 100 0.50 130 0.10 a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.) Expected value units b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Standard deviation units
- Myers Business Systems is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given next: Possible Market Reaction Low response Moderate response High response Very high response Expected value Sales in Units 25 units Standard deviation a. What is the expected value of unit sales for the new product? Note: Do not round intermediate calculations and round your answer to the nearest whole unit. 35 40 70 Probabilities 0.40 units 0.20 0.10 0.30 b. What is the standard deviation of unit sales? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.Sampson Corp. Is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are shown next: Possible Market Reaction Low response Moderate response Bigh response Very high response Expected value Sales in Units 60 80 100 120 a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.) Standard deviation units Probabilities 0.20 0.30 0.30 0.20 H b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.) units 1 of 8 RE Next > Liones reale.PHighknob Co is thinking about introducing a new product.Below are the possible levels of unit sales and the probabilities of their occurrence. What is the expected value of the new product? Possible Market Reaction Sales in Units Probabilities Low Response 20 .10 Moderate Response 40 .20 High Response 65 .40 Very High Response 80 .30
- The management of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new product. The selling price for the product will be $45 per unit. Probability distributions for the purchase cost, the labor cost, and the transportation cost are estimated as follows: ProcurementCost ($) Probability LaborCost ($) Probability TransportationCost ($) Probability 10 0.2 18 0.25 2 0.74 12 0.35 20 0.35 5 0.26 13 0.45 22 0.1 25 0.3 Compute profit per unit for the base-case, worst-case, and best-case scenarios.Profit per unit for the base-case: $ fill in the blank 1Profit per unit for the worst-case: $ fill in the blank 2Profit per unit for the best-case: $ fill in the blank 3 Construct a simulation model to estimate the mean profit per unit. If required, round your answer to the nearest cent.Mean profit per unit = $ fill in the blank 4 Why is the simulation approach to risk analysis preferable to generating a variety of…Quest. Simulation) The mai..gement of Brinkley Corporation is interested in using simulation to estimate the profit per unit for a new product. Probability distributions for the purchase cost, the labor cost, and the transportation cost are as follows: Labour Purchase Transportation Cost ($) Cost Cost ($) Probability ($) Probability Probability 10 0.25 20 0.1 3 0.75 11 0.45 22 0.25 0.25 12 0.3 24 0.35 25 0.3 Assume that these are the only costs and that the selling price for the product will be $45 per unit. a. Provide the base (most likely)-case, worst-case, and best-case calculations for the profit per unit. b. Set up intervals of random numbers that can be used to randomly generate the three cost components, and find the average profit based on 10 simulation trials. Show your simulation model (including the formulas sed) as developed with Excel. c. Using the random numbers 0.3726, 0.5839, and 0.8275, calculate the profit per unit. ( d. Management believes the project may not be…Question 2 (input refer to picture attached) a) Based on Return of Investment (ROI) evaluation, which unit will you recommend to your management to be purchased and why? b) From Life Cycle Cost (LCC) Analysis, would you Brand X or Brand Y crane? What is your recommendation and why? c) Based on the Minimum Acceptable Rate of Return (MARR), if the company hurdle rate is 20 %, would you choose Brand X or Brand Y and why? – include the cashflow diagram
