Garrison Limited is a retail business and trading conditions have been deteriorating. The CFO estimates...
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Garrison Limited is a retail business and trading conditions have been deteriorating. The CFO estimates the potential volatility in earnings, measured as the standard deviation of the firms value, could be $900,000 per annum, with an expected profit of $650,000. Garrison Limited cost of funds is 5.5%pa.
What is the Annual VaR (rounded to the nearest $) if the company uses a 99% confidence level based on a normal distribution?
Select one:
a. 1,485,000
b. 1,072,500
c. 2,097,000
d. 1,514,500
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