14.) Mr. Monty Terry, a real estate investor, is trying to decide between two potential small shopping center purchases. His choices are the Wrigley Village and Crosley Square. The anticipated annual cash inflows from each are as follows:
Wrigley Village Crosley Square
Yearly Aftertax Cash Probability Yearly Aftertax Cash Probability
Inflow (in thousands) Inflow (in thousands)
$10 .1 $20 .1
30 .2 30 .3
40 .3 35 .4
50 .3 50 .2
a. Find the expected value of the cash flow from each shopping center.
b. What is the coefficient of variation for each shopping center?
c. Which shopping center has more risk?© BrainMass Inc. brainmass.com June 3, 2020, 9:36 pm ad1c9bdddf
See the attached file for complete solution. The text here may not be copied exactly as some of the symbols / tables may not print. Thanks
After Tax cash ...
This post explains how to calculate the expected return and risk on investment, which provides different pay off under different scenarios. The different measures of risk are calculated such as standard deviation and coefficient of variation.