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Measuring Utility One way to quantify utility: U = E(r) - ½ Aσ² See the table below: Calculate the U score for each value of A. E(r) 4% 5.1% 8.2% 12.3% 0% 6% 14% 22% A=1 0.0400 0.0492 0.0722 0.0988 A=3 0.0400 0.0456 0.0526 0.0504 A=5 0.0400 0.0420 0.0330 0.0020

Measuring Utility One way to quantify utility: U = E(r) - ½ Aσ² See the table below: Calculate the U score for each value of A. E(r) 4% 5.1% 8.2% 12.3% 0% 6% 14% 22% A=1 0.0400 0.0492 0.0722 0.0988 A=3 0.0400 0.0456 0.0526 0.0504 A=5 0.0400 0.0420 0.0330 0.0020

Entrepreneurial Finance
Entrepreneurial Finance
6th Edition
ISBN:9781337635653
Author:Leach
Publisher:Leach
Chapter5: Evaluating Operating And Financial Performance
Section: Chapter Questions
Problem 6DQ
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Measuring Utility One way to quantify utility: U = E(r) - ½ Aσ² See the table below: Calculate the U score for each value of A. E(r) 4% 5.1% 8.2% 12.3% 0% 6% 14% 22% A=1 0.0400 0.0492 0.0722 0.0988 A=3 0.0400 0.0456 0.0526 0.0504 A=5 0.0400 0.0420 0.0330 0.0020
Transcribed Image Text:Measuring Utility One way to quantify utility: U = E(r) - ½ Aσ² See the table below: Calculate the U score for each value of A. E(r) 4% 5.1% 8.2% 12.3% 0% 6% 14% 22% A=1 0.0400 0.0492 0.0722 0.0988 A=3 0.0400 0.0456 0.0526 0.0504 A=5 0.0400 0.0420 0.0330 0.0020
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