3) Coefficient of variation and investment decision Mr. Sam Golff desires to invest a portion of his assets in rental property. He has narrowed his choices down to two apartment complexes, Palmer Heights and Crenshaw Village. After conferring with the present owners, Mr. Golff has developed the following estimates of the cash flows for these properties: Palmer Heights Crenshaw Village Yearly Aftertax Cash Inflow (in thousands) Probability Yearly Aftertax Cash Inflow (in thousands) Probability $70.................. .2 $75..................... .2 75.................. .2 80..................... .3 90.................. .2 90..................... .4 105.................. .2 100..................... .1 110.................. .2 a. Find the expected cash flow from each apartment complex. b. What is the coefficient of variation for each apartment complex? c. Which apartment complex has more risk
3) Coefficient of variation and investment decision Mr. Sam Golff desires to invest a portion of his assets in rental property. He has narrowed his choices down to two apartment complexes, Palmer Heights and Crenshaw Village. After conferring with the present owners, Mr. Golff has developed the following estimates of the cash flows for these properties: Palmer Heights Crenshaw Village Yearly Aftertax Cash Inflow (in thousands) Probability Yearly Aftertax Cash Inflow (in thousands) Probability $70.................. .2 $75..................... .2 75.................. .2 80..................... .3 90.................. .2 90..................... .4 105.................. .2 100..................... .1 110.................. .2 a. Find the expected cash flow from each apartment complex. b. What is the coefficient of variation for each apartment complex? c. Which apartment complex has more risk
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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3) Coefficient of variation and investment decision
Mr. Sam Golff desires to invest a portion of his assets in rental property. He has narrowed his choices down to two apartment complexes, Palmer Heights and Crenshaw Village. After conferring with the present owners, Mr. Golff has developed the following estimates of the cash flows for these properties:
|
Palmer Heights |
|
Crenshaw Village |
||
|
Yearly Aftertax |
Probability |
|
Yearly Aftertax Cash Inflow (in thousands) |
Probability |
|
$70.................. |
.2 |
|
$75..................... |
.2 |
|
75.................. |
.2 |
|
80..................... |
.3 |
|
90.................. |
.2 |
|
90..................... |
.4 |
|
105.................. |
.2 |
|
100..................... |
.1 |
|
110.................. |
.2 |
|
- a. Find the expected cash flow from each apartment complex.
- b. What is the coefficient of variation for each apartment complex?
- c. Which apartment complex has more risk
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