Micro-Pub, Inc., is considering the purchase of one of two microfilm? cameras, R and S. Both...
60.1K
Verified Solution
Link Copied!
Question
Finance
Micro-Pub, Inc., is considering the purchase of one of twomicrofilm? cameras, R and S. Both should provide benefits over a?10-year period, and each requires an initial investment of
?$3,000.
Management has constructed the following table of estimates ofrates of return and probabilities for? pessimistic, most? likely,and optimistic? results
Camera R
Camera S
Amount
Probability
Amount
Probability
Initial investment
?$3,000
1.00
?$3,000
1.00
Annual rate of return
Pessimistic
21?%
0.21
16?%
0.23
Most likely
27?%
0.46
29?%
0.57
Optimistic
31?%
0.33
32?%
0.20
?
Which
camera purchase is? riskier? ? Why?
Micro-Pub, Inc., is considering the purchase of one of twomicrofilm? cameras, R and S. Both should provide benefits over a?10-year period, and each requires an initial investment of
?$3,000.
Management has constructed the following table of estimates ofrates of return and probabilities for? pessimistic, most? likely,and optimistic? results
Camera R | Camera S | |||
Amount | Probability | Amount | Probability | |
Initial investment | ?$3,000 | 1.00 | ?$3,000 | 1.00 |
Annual rate of return | ||||
Pessimistic | 21?% | 0.21 | 16?% | 0.23 |
Most likely | 27?% | 0.46 | 29?% | 0.57 |
Optimistic | 31?% | 0.33 | 32?% | 0.20 |
?
Which
camera purchase is? riskier? ? Why?
Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Transcribed Image Text
Micro-Pub, Inc., is considering the purchase of one of twomicrofilm? cameras, R and S. Both should provide benefits over a?10-year period, and each requires an initial investment of?$3,000.Management has constructed the following table of estimates ofrates of return and probabilities for? pessimistic, most? likely,and optimistic? resultsCamera RCamera SAmountProbabilityAmountProbabilityInitial investment?$3,0001.00?$3,0001.00Annual rate of returnPessimistic21?%0.2116?%0.23Most likely27?%0.4629?%0.57Optimistic31?%0.3332?%0.20?Whichcamera purchase is? riskier? ? Why?
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.