XYZ ltd. is considering three possible capital projects for next year. Each project has a 1 year
Question:
XYZ ltd. is considering three possible capital projects for next year. Each project has a 1 year life, and project returns depend on next years state of the economy. The estimated rates of return are shown below.
STATE OF THE PROBABILITY RATE OF RETURN
ECONOMY OF OCCURRENCE A B C
Recession 0.25 10% 9% 14%
Average 0.50 14 13 12
BOOM 0.25 16 18 10
REQUIRED: Find each project expected rate of return, variance, standard deviation and coefficient of variation.
Microeconomics Principles, Problems and Policies
ISBN: 978-1259450242
20th edition
Authors: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn