The Andrew Jonathan SLOTTJE Company has proposed a new branch in Dallas for next year. The project's returns are as follows:

Year_______________ Project Return (Ri)

1994…………………………………..0.11

1995…………………………………..0.15

1996…………………………………..0.13

1997…………………………………..0.16

1998…………………………………..0.17

1999…………………………………..0.19

2000…………………………………..0.21

2001…………………………………..0.10

2002…………………………………..0.09

2003…………………………………..0.11

Based on this information do the following:

1. 1. Calculate the expected return.
2. 2. Calculate the variance and standard deviation of all the returns.
3. 3. Calculate the coefficient of variation of all the returns.
4. 4. Create a chart to illustrate the trend in project returns over time.
5. 5. Add a solid line representing the expected return and dotted lines illustrating a 95% confidence interval about the expected return.

Include a brief discussion that contains an analysis, as well as your recommendation, for this case.

• The expected return is equivalent to the mean value.
• The coefficient of variation is defined as

Standard Deviation
Coefficient of variation = ---------------------------- X 100
Mean

This is a measure of the risk involved in the investment.

• For 95% confidence is equal to 2.5710. Based on this calculate the upper and lower confidence interval using the standard deviation of the sample distribution.

Answer rating: 100% (QA)

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