1. Al Bundy is evaluating a new advertising program that could increase shoe sales. Possible outcomes and probabilities of the outcomes are shown next.

Possible Outcomes	Additional Sales in Units			Probabilities
Ineffective campaign		80			0.40
Normal response		120			0.20
Extremely effective		385			0.40

Compute the coefficient of variation. (Do not round intermediate calculations. Round your answer to 3 decimal places.)

2. Allisons Dresswear Manufacturers is preparing a strategy for the fall season. One alternative is to expand its traditional ensemble of wool sweaters. A second option would be to enter the cashmere sweater market with a new line of high-quality designer label products. The marketing department has determined that the wool and cashmere sweater lines offer the following probability of outcomes and related cash flows.

	Expand Wool Sweaters Line							Enter Cashmere Sweaters Line
Expected Sales	Probability			Present Value of Cash Flows from Sales				Probability			Present Value of Cash Flows from Sales
Fantastic		0.5		$	221,000				0.3		$	341,000
Moderate		0.2			192,000				0.4			272,000
Low		0.3			88,600				0.3			0

The initial cost to expand the wool sweater line is $142,000. To enter the cashmere sweater line, the initial cost in designs, inventory, and equipment is $102,000. a. Calculate net present value if, Allisons Dresswear Manufacturers decides to: (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest whole dollar.)

	Net Present Value
Expand wool sweaters line
Enter cashmere sweaters line