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Kyle’s Shoe Stores Inc. is considering opening an additional suburban outlet. An aftertax expected cash flow...

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Finance

Kyle’s Shoe Stores Inc. is considering opening an additionalsuburban outlet. An aftertax expected cash flow of $120 per week isanticipated from two stores that are being evaluated. Both storeshave positive net present values.
  

Site ASite B
ProbabilityCash FlowsProbabilityCash Flows
.260.230
.2120.160
.3130.2120
.3150.2150
.3180


a. Compute the coefficient of variation for eachsite. (Do not round intermediate calculations. Round youranswers to 3 decimal places.)
  


  
b. Which store site would you select based on thedistribution of these cash flows? Use the coefficient of variationas your measure of risk.
  

Site A
Site B

Answer & Explanation Solved by verified expert
3.5 Ratings (337 Votes)
Answer to Question bThe variable with the small Coefficient of    See Answer
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Transcribed Image Text

Kyle’s Shoe Stores Inc. is considering opening an additionalsuburban outlet. An aftertax expected cash flow of $120 per week isanticipated from two stores that are being evaluated. Both storeshave positive net present values.  Site ASite BProbabilityCash FlowsProbabilityCash Flows.260.230.2120.160.3130.2120.3150.2150.3180a. Compute the coefficient of variation for eachsite. (Do not round intermediate calculations. Round youranswers to 3 decimal places.)    b. Which store site would you select based on thedistribution of these cash flows? Use the coefficient of variationas your measure of risk.  Site ASite B

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