Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Initial investment Annual rate of return Pessimistic Most likely Optimistic Camera R Amount $5,000 20% 29% 31% Probability 1.00 0.29 0.39 0.32 Camera S Amount $5,000 16% 25% 30% Probability 1.00 0.23 0.55 0.22
Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Initial investment Annual rate of return Pessimistic Most likely Optimistic Camera R Amount $5,000 20% 29% 31% Probability 1.00 0.29 0.39 0.32 Camera S Amount $5,000 16% 25% 30% Probability 1.00 0.23 0.55 0.22
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
Related questions
Question
![**Risk and Probability**
Micro-Pub, Inc., is considering the purchase of one of two microfilm cameras, R and S. Both should provide benefits over a 10-year period, and each requires an initial investment of $5,000. Management has constructed the following table of estimates of rates of return and probabilities for pessimistic, most likely, and optimistic results.
- **a.** Determine the range for the rate of return for each of the two cameras.
- **b.** Determine the value of the expected return for each camera.
- **c.** Which camera purchase is riskier? Why?
**Task a.** The range for the rate of return for camera R is [ ]%. (Round to the nearest whole number.)
*Note: The actual numerical data, including graphs or diagrams, is not visible in the image provided. Please ensure to refer to the original tables or figures to gather detailed information and calculations necessary to solve the questions presented.*](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb3b07c0a-1a3f-49c8-9960-f391d5264025%2F196064e5-30d2-499b-9bce-36bc0e13fd1d%2Fos1y6eq_processed.png&w=3840&q=75)
Transcribed Image Text:**Risk and Probability**
Micro-Pub, Inc., is considering the purchase of one of two microfilm cameras, R and S. Both should provide benefits over a 10-year period, and each requires an initial investment of $5,000. Management has constructed the following table of estimates of rates of return and probabilities for pessimistic, most likely, and optimistic results.
- **a.** Determine the range for the rate of return for each of the two cameras.
- **b.** Determine the value of the expected return for each camera.
- **c.** Which camera purchase is riskier? Why?
**Task a.** The range for the rate of return for camera R is [ ]%. (Round to the nearest whole number.)
*Note: The actual numerical data, including graphs or diagrams, is not visible in the image provided. Please ensure to refer to the original tables or figures to gather detailed information and calculations necessary to solve the questions presented.*
Transcribed Image Text:## Data Table Overview
This data table provides a comparative analysis of two investment options: Camera R and Camera S. Both options require an initial investment of $5,000.
### Annual Rate of Return and Probabilities
#### Camera R
- **Initial Investment**: $5,000
- **Probability**: 1.00
**Annual Rate of Return Scenarios:**
- **Pessimistic**: 20% with a probability of 0.29
- **Most Likely**: 29% with a probability of 0.39
- **Optimistic**: 31% with a probability of 0.32
#### Camera S
- **Initial Investment**: $5,000
- **Probability**: 1.00
**Annual Rate of Return Scenarios:**
- **Pessimistic**: 16% with a probability of 0.23
- **Most Likely**: 25% with a probability of 0.55
- **Optimistic**: 30% with a probability of 0.22
### Instructions
You can click on the provided icon in the table to copy its contents into a spreadsheet for further analysis.
### Actions
- **Print**: You may print the table for offline review.
- **Done**: Indicate when you have completed your review of the data table.
This table provides a probability-weighted overview of potential returns, aiding investment decision-making by comparing different scenarios for each camera.
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