Range of rate of return . Introduction: Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss. Return: In financial context, return is seen as percentage that represents the profit in an investment.

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Answer 1

Question

Chapter 8, Problem 8.5P

a)

Summary Introduction

To determine:

Range of rate of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To determine:

Expected value of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To discuss:

Risky purchase.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

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6 Risk and probability Micro-Pub, Inc., 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 $5,000. Management has constructed the following table of estimates of rates of return and probabilities for pessimistic, most likely, and optimistic results: a. Determine the range for the rate of return for each of the two cameras. b. Determine the value of the expected return for each camera. c. Which camera purchase is riskier? Why? a. The range for the rate of return for camera R is %. (Round to the nearest whole number.) Financial calculator Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Initial investment Annual rate of return Pessimistic Most likely Optimistic Camera R Amount $5,000 22% 28% 32% Camera S Probability Amount Probability 1.00 $5,000 1.00 0.26 0.54 0.20 19% 25% 30% 0.23 0.59 0.18 X

Risk and probability Micro-Pub, Inc., 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 $2,000. Management has constructed the following table of estimates of rates of return and probabilities for pessimistic, most likely, and optimistic results: a. Determine the range for the rate of return for each of the two cameras. b. Determine the value of the expected return for each camera. c. Which camera purchase is riskier? Why? a. The range for the rate of return for camera R is %. (Round to the nearest whole number.) Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Initial investment Annual rate of return Pessimistic Most likely Optimistic Camera R Amount $2,000 15% 29% 31% C 0.29 0.51 0.20 Probability Amount 1.00 $2,000 Camera S 21% 26% 30% Probability 1.00 0.18 0.54 0.28 - X

SNA company management is considering two competing investment Projects A and B. Year Project A Project B Initial Investment 1000 1000 1 275 300 2 275 300 3 275 300 4 275 300 5 275 300 DISCOUNT RATE 3.15% help management to choose the most desirable Project .You must use each technique from 1 to 4 and get the answer? 1)Payback Period Technique.2) Discounted Payback Period Technique.3) Net Present Value Technique4) Profitability Index Technique.

Answer 2

Question

Chapter 8, Problem 8.5P

a)

Summary Introduction

To determine:

Range of rate of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To determine:

Expected value of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To discuss:

Risky purchase.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

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Answer 3

Question

Chapter 8, Problem 8.5P

a)

Summary Introduction

To determine:

Range of rate of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To determine:

Expected value of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To discuss:

Risky purchase.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

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Answer 4

Question

Chapter 8, Problem 8.5P

a)

Summary Introduction

To determine:

Range of rate of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To determine:

Expected value of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To discuss:

Risky purchase.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

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Answer 5

Chapter 8, Problem 8.5P

a)

Summary Introduction

To determine:

Range of rate of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

b)

Summary Introduction

To determine:

Expected value of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

c)

Summary Introduction

To discuss:

Risky purchase.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 6

Chapter 8, Problem 8.5P

a)

Summary Introduction

To determine:

Range of rate of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 7

Chapter 8, Problem 8.5P

a)

Summary Introduction

To determine:

Range of rate of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 8

b)

Summary Introduction

To determine:

Expected value of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 9

b)

Summary Introduction

To determine:

Expected value of return.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 10

c)

Summary Introduction

To discuss:

Risky purchase.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 11

c)

Summary Introduction

To discuss:

Risky purchase.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

Return: In financial context, return is seen as percentage that represents the profit in an investment.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 8.1 - What is risk in the context of financial decision...Ch. 8.1 - Prob. 8.2RQ Ch. 8.1 - Compare the following risk preferences: (a) risk...Ch. 8.2 - Explain how the range is used in scenario...Ch. 8.2 - Prob. 8.5RQ Ch. 8.2 - Prob. 8.6RQ Ch. 8.2 - What does the coefficient of variation reveal...Ch. 8.3 - What is an efficient portfolio? How can the return...Ch. 8.3 - Prob. 8.9RQ Ch. 8.3 - How does international diversification enhance...

Solution Summary: The author defines risk as the uncertainty attached to an event such as investment where there can be either gain or loss. Return is seen as percentage that represents the profit in an investment.

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