Problem $13-12($Algo$)$ Coefficient of variation and investment decision $[$L$013-1]$

Karamo's Shoe Stores Incorporated is considering opening an additional suburban outlet. An aftertax expected cash flow of $$120$ per

week is anticipated from two stores that are being evaluated. Both stores have positive net present values.

Site B

Probability

$0\mathrm{.}1$

$0\mathrm{.}2$

$0\mathrm{.}2$

$0\mathrm{.}4$

$0\mathrm{.}1$

a$.$ Compute the coefficient of variation for each site.

Note: Do not round intermediate calculations. Round your answers to $3$ decimal places.

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.

Site A

Site $B$