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Problem 8-05 Two investments generated the following annual returns: Investment X Investment Y 20x0 13% 17 % 20X1 24 20X2 18

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Answer #1

Using excel formula

X Y
Year Project X Project Y
1 20X0 13% 17%
2 20X1 24% 18%
3 20X2 18% 14%
4 20X3 14% 21%
5 20X4 12% 22%
Average annual rate of return on 17.25% 17.50%
Using excel formula Average(A1:A5) Average(B1:B5)
Standard Deviation 4.92% 3.21%
Using excel formula STDEV(A1:A5) STDEV(B1:B5)

c. Project X is more riskier

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