Mr. Sam Golff desires to invest a portion of his assets in rental property. He has...

90.2K

Verified Solution

Question

Finance

Mr. Sam Golff desires to invest a portion of his assets inrental property. He has narrowed his choices down to two apartmentcomplexes, Palmer Heights and Crenshaw Village. After conferringwith the present owners, Mr. Golff has developed the followingestimates of the cash flows for these properties.

Palmer Heights
Yearly Aftertax
Cash Inflow
(in thousands) Probability
$ 20 .2
25 .2
40 .2
55 .2
60 .2

Crenshaw Village
Yearly Aftertax
Cash Inflow
(in thousands) Probability
$ 25 .2
30 .3
40 .4
50 .1

a. Find the expected cash flow from each apartmentcomplex. (Enter your answers in thousands (e.g, $10,000should be enter as "10").)



b. What is the coefficient of variation for eachapartment complex? (Do not round intermediate calculations.Round your answers to 3 decimal places.)



c. Which apartment complex has more risk?

Palmer Heights
Crenshaw Village

Answer & Explanation Solved by verified expert

3.5 Ratings (609 Votes)

ab Coefficent of See Answer

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!

Become a Member

Transcribed Image Text

Mr. Sam Golff desires to invest a portion of his assets inrental property. He has narrowed his choices down to two apartmentcomplexes, Palmer Heights and Crenshaw Village. After conferringwith the present owners, Mr. Golff has developed the followingestimates of the cash flows for these properties. Palmer HeightsYearly AftertaxCash Inflow(in thousands)Probability$20.225.240.255.260.2 Crenshaw VillageYearly AftertaxCash Inflow(in thousands)Probability$25.230.340.450.1a. Find the expected cash flow from each apartmentcomplex. (Enter your answers in thousands (e.g, $10,000should be enter as "10").) b. What is the coefficient of variation for eachapartment complex? (Do not round intermediate calculations.Round your answers to 3 decimal places.) c. Which apartment complex has more risk? Palmer HeightsCrenshaw Village

Palmer Heights
Yearly Aftertax Cash Inflow (in thousands)		Probability
$	20		.2
	25		.2
	40		.2
	55		.2
	60		.2

Crenshaw Village
Yearly Aftertax Cash Inflow (in thousands)		Probability
$	25		.2
	30		.3
	40		.4
	50		.1