Micropub's camera purchases, ROR, expected value of return
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Micropub is considering the purchase of one of two microfilm cameras, R, and S. Both should provide benefits over a 10 year period, and each requires an initial investment of $4000. Management has constructed the attached table of estimates of rates of return and probabilities for pessimistic, most likely, and optomistic results.
a) determine the range for the rate of return for each of the two cameras.
b) determine the expected value of return for each camera
c) purchase of which camera is riskier? why?
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Solution Summary
For a Micropub's camera purchases, the ROR and expected value of return were calculated. Which camera purchase is riskier is determined.
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