Karamo's Shoe Stores Incorporated is considering opening an additional suburban outlet. An aftertax expected cash flow week is anticipated from two stores that are being evaluated. Both stores have positive net present values. Probability 0.1 0.3 0.3 0.3 Site A Site A Cash Flows $90 180 170 220 Coefficient of Variation Probability 0.1 0.3 0.3 0.1 0.2 Site B a. Compute the coefficient of variation for each site. Note: Do not round intermediate calculations. Round your answers to 3 decimal places. Cash Flows $ 50 70 180 230 290

Excel Applications for Accounting Principles
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Karamo's Shoe Stores Incorporated is considering opening an additional suburban outlet. An aftertax expected cash flow of $180 per
week is anticipated from two stores that are being evaluated. Both stores have positive net present values.
Probability
0.1
0.3
0.3
0.3
Site A
Probability
0.1
0.3
0.3
0.1
0.2
a. Compute the coefficient of variation for each site.
Note: Do not round intermediate calculations. Round your answers to 3 decimal places.
Site A
Site B
Cash Flows
Coefficient of
Variation
Site B
$90
180
170
220
Cash Flows
$ 50
70
180
230
290
b. Which store site would you select based on the distribution of these cash flows? Use the coefficient of variation as your measure of
risk.
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Transcribed Image Text:Karamo's Shoe Stores Incorporated is considering opening an additional suburban outlet. An aftertax expected cash flow of $180 per week is anticipated from two stores that are being evaluated. Both stores have positive net present values. Probability 0.1 0.3 0.3 0.3 Site A Probability 0.1 0.3 0.3 0.1 0.2 a. Compute the coefficient of variation for each site. Note: Do not round intermediate calculations. Round your answers to 3 decimal places. Site A Site B Cash Flows Coefficient of Variation Site B $90 180 170 220 Cash Flows $ 50 70 180 230 290 b. Which store site would you select based on the distribution of these cash flows? Use the coefficient of variation as your measure of risk. Activate Window
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