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Mr. John Backster, a retired executive, desires to invest a portion of his assets in rental property. He has narrowed his choices to two apartment complexes, Windy Acres and Hillcrest Apartments. The anticipated annual cash inflows from each are as follows: Windy Acres Yearly Aftertax Cash Inflow $30,000 35,000 50,000 65,000 70,000 Windy Acres Hillcrest Apartments Probability 0.2 0.2 0.2 Windy Acres Hillcrest Apartments 0.2 0.2 O Windy Acres a. Find the expected value of the cash flow for each apartment complex. (Enter the answers in thousands.) Expected cash flow $ $ Hillcrest Apartments Yearly Aftertax Cash Coefficient of variation c. Which apartment complex has more risk? Inflow $35,000 40,000 50,000 60,000 b. What is the coefficient of variation for each apartment complex? (Do not round intermediate calculations. Round the final answers to 4 decimal places.) Probability 0.2 0.4 0.2 0.2

Mr. John Backster, a retired executive, desires to invest a portion of his assets in rental property. He has narrowed his choices to two apartment complexes, Windy Acres and Hillcrest Apartments. The anticipated annual cash inflows from each are as follows: Windy Acres Yearly Aftertax Cash Inflow $30,000 35,000 50,000 65,000 70,000 Windy Acres Hillcrest Apartments Probability 0.2 0.2 0.2 Windy Acres Hillcrest Apartments 0.2 0.2 O Windy Acres a. Find the expected value of the cash flow for each apartment complex. (Enter the answers in thousands.) Expected cash flow $ $ Hillcrest Apartments Yearly Aftertax Cash Coefficient of variation c. Which apartment complex has more risk? Inflow $35,000 40,000 50,000 60,000 b. What is the coefficient of variation for each apartment complex? (Do not round intermediate calculations. Round the final answers to 4 decimal places.) Probability 0.2 0.4 0.2 0.2

Essentials Of Investments
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
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Mr. John Backster, a retired executive, desires to invest a portion of his assets in rental property. He has narrowed his choices to two apartment complexes, Windy Acres and Hillcrest Apartments. The anticipated annual cash inflows from each are as follows: Windy Acres Yearly Aftertax Cash Inflow $30,000 35,000 50,000 65,000 70,000 Windy Acres Hillcrest Apartments Probability 0.2 0.2 0.2 0.2 0.2 Windy Acres Hillcrest Apartments a. Find the expected value of the cash flow for each apartment complex. (Enter the answers in thousands.) Expected cash flow $ $ O Windy Acres Hillcrest Apartments Yearly Aftertax Cash b. What is the coefficient of variation for each apartment complex? (Do not round intermediate calculations. Round the final answers to 4 decimal places.) Coefficient of variation c. Which apartment complex has more risk? Inflow $35,000 40,000 50,000 60,000 Probability 0.2 0.4 0.2 0.2
Transcribed Image Text:Mr. John Backster, a retired executive, desires to invest a portion of his assets in rental property. He has narrowed his choices to two apartment complexes, Windy Acres and Hillcrest Apartments. The anticipated annual cash inflows from each are as follows: Windy Acres Yearly Aftertax Cash Inflow $30,000 35,000 50,000 65,000 70,000 Windy Acres Hillcrest Apartments Probability 0.2 0.2 0.2 0.2 0.2 Windy Acres Hillcrest Apartments a. Find the expected value of the cash flow for each apartment complex. (Enter the answers in thousands.) Expected cash flow $ $ O Windy Acres Hillcrest Apartments Yearly Aftertax Cash b. What is the coefficient of variation for each apartment complex? (Do not round intermediate calculations. Round the final answers to 4 decimal places.) Coefficient of variation c. Which apartment complex has more risk? Inflow $35,000 40,000 50,000 60,000 Probability 0.2 0.4 0.2 0.2
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