Question

Risk and probability Micro-Pub, Inc. is considering the purchase of one of two microfilm cameras, Rand S. Both should provide benefits over a 10-year period, and each requires an initial investment of $4.000. Management has constructed the following table of estimates of rates of return and probabilities for pessimistic, most likely, and optimistic results: cameras Determine the range for the rate of return for each of the b. Determine the value of the expected return for each camera c. Which camera purchase is riskier? Why? The range for the role of retum for camera R o und to the nearest whole number)

Answer 1

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STATS - Microsoft Excel (Product Activation Failed) Add-Ins File Home Insert Page Layout Formulas Data Review View - 2x % Cut Dr General Wrap Text Merge & Center - $ -% Σ AutoSum : A Fill Sort & Clear Filter Editing Formatting Styles as Table Styles Find & Select Alignment Number Cells H Calibri -11AA = = = E Copy Paste Format Painter BI U D A Clipboard Font D73 А 73 CAMERAR 74 ANNUAL RATE OF RETURN 75 76 PROB 77 B 78 PESSIMISTIC 0.29 79 MOST LIKELY 0.54 80 OPTIMISTIC 31 0.17 CAMERAS ANNUAL RATE OF RETURN EXPECTED RETURN A*B EXPECTED RETURN A*B 5.8 15.12 5.27 26.19 PESSIMISTIC MOST LIKELY OPTIMISTIC PROB B 0.22 0.56 0.22 3.3 14.56 7.26 25.12 81 82 11 RANGE FOR THE RATE OF RETURN (CAMERA R)= RANGE FOR THE RATE OF RETURN (CAMERA S) = 18 83 a 84 85 86 b 87 88 89 C EXPECTED RETURN FOR CAMERA R= EXPECTED RETURN FOR CAMERAS 26.19 25.12 90 WHICH CAMERA PURCHASE IS RISKIER: CAMERAS BECAUSE THE RANGE IS HIGHER FOR CAMERAS PURCHASE OF CAMERA S IS RISKIER BECAUSE IT HAS HIGHER RANGE FOR RATE OF RETURN 91 K P EMV MEAN STDV assignment DEAR Sheet2 COVTIME SERIEScorr REGRESSION range CAMERA TREND freg MATRIX V FV DIVIDEND ferences INTERVAL, NORMAL BO HYPOTHO HI 130% Red 0 + DO 4 * 4 OENG 29-10-2019