The expected cash flow of each apartment complex. Introduction: Expected value: Also known as mean, it is the value estimated or anticipated to be earned in the future from an investment. It is computed by adding up the values obtained after multiplying each outcome with its probability. Cash flow: The amount of cash and its equivalents transferred in and out of a business is termed as cash flow.

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Answer 1

Question

Chapter 13, Problem 18P

a.

Summary Introduction

To calculate: The expected cash flow of each apartment complex.

Introduction:

Expected value:

Also known as mean, it is the value estimated or anticipated to be earned in the future from an investment. It is computed by adding up the values obtained after multiplying each outcome with its probability.

Cash flow:

The amount of cash and its equivalents transferred in and out of a business is termed as cash flow.

b.

Summary Introduction

To calculate: The CoV of each apartment complex.

Introduction:

Coefficient of variation ( CoV ):

It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

c.

Summary Introduction

To explain: The riskier apartment complex.

Introduction:

Coefficient of variation ( CoV ):

It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

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Mr. Sam Golff desires to invest a portion of his assets in rental property. He has narrowed his choices down to two apartment complexes, Palmer Heights and Crenshaw Village. After conferring with the present owners, Mr. Golff has developed the following estimates of the cash flows for these properties. Palmer Heights Yearly AftertaxCash Inflow(in thousands) Probability $60 0.1 65 0.2 80 0.4 95 0.2 100 0.1 Crenshaw Village Yearly AftertaxCash Inflow(in thousands) Probability $65 0.2 70 0.3 80 0.4 90 0.1 a. Find the expected cash flow from each apartment complex. (Enter your answers in thousands (e.g, $10,000 should be enter as "10").) b. What is the coefficient of variation for each apartment complex? (Do not round intermediate calculations. Round your answers to 3 decimal places.) c. Which apartment complex has more…

You are considering investing in real estate—both for the short-term cash flows and the potential long-term capital gains—and are evaluating both a commercial lease property (such as a strip shopping center or an office building) and a residential rental property (such as several rental houses or a small apartment complex). It is likely that you will invest in only one of these properties at this time. The general data regarding these investments is as follows: propertytype price mortage rental income (per year) depreciationexpense (per year) Estimatedresalevalue small office $800,000 $448,000 $136,016 $7,692 $912,000 rental homes $650,000 $292,500 $91,281 $8,273 $685,100 The first potential investment consists of an office building with ten offices, which has a current market price of $800,000. Of this amount, $200,000 represents the cost of the land, and the balance, $600,000, is attributable to buildings on the property. The second possible investment, which…

Use the following information for the next two problems: John Jones wants to invest in rental property. He has decided to invest in Portland. He has developed the following estimates of the cash flows for these properties: Yearly After-Tax Cash Flows Probability $10,000 .10 15,000 .20 30,000 .40 45,000 .20 50,000 .10 Find the expected value Find the standard deviation

Answer 2

Question

Chapter 13, Problem 18P

a.

Summary Introduction

To calculate: The expected cash flow of each apartment complex.

Introduction:

Expected value:

Also known as mean, it is the value estimated or anticipated to be earned in the future from an investment. It is computed by adding up the values obtained after multiplying each outcome with its probability.

Cash flow:

The amount of cash and its equivalents transferred in and out of a business is termed as cash flow.

b.

Summary Introduction

To calculate: The CoV of each apartment complex.

Introduction:

Coefficient of variation ( CoV ):

It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

c.

Summary Introduction

To explain: The riskier apartment complex.

Introduction:

Coefficient of variation ( CoV ):

It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

Expert Solution & Answer

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Answer 3

Question

Chapter 13, Problem 18P

a.

Summary Introduction

To calculate: The expected cash flow of each apartment complex.

Introduction:

Expected value:

Also known as mean, it is the value estimated or anticipated to be earned in the future from an investment. It is computed by adding up the values obtained after multiplying each outcome with its probability.

Cash flow:

The amount of cash and its equivalents transferred in and out of a business is termed as cash flow.

b.

Summary Introduction

To calculate: The CoV of each apartment complex.

Introduction:

Coefficient of variation ( CoV ):

It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

c.

Summary Introduction

To explain: The riskier apartment complex.

Introduction:

Coefficient of variation ( CoV ):

It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

Expert Solution & Answer

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Answer 4

Question

Chapter 13, Problem 18P

a.

Summary Introduction

To calculate: The expected cash flow of each apartment complex.

Introduction:

Expected value:

Also known as mean, it is the value estimated or anticipated to be earned in the future from an investment. It is computed by adding up the values obtained after multiplying each outcome with its probability.

Cash flow:

The amount of cash and its equivalents transferred in and out of a business is termed as cash flow.

b.

Summary Introduction

To calculate: The CoV of each apartment complex.

Introduction:

Coefficient of variation ( CoV ):

It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

c.

Summary Introduction

To explain: The riskier apartment complex.

Introduction:

Coefficient of variation ( CoV ):

It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

Expert Solution & Answer

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Answer 5

Chapter 13, Problem 18P

a.

Summary Introduction

To calculate: The expected cash flow of each apartment complex.

Introduction:

Expected value:

Also known as mean, it is the value estimated or anticipated to be earned in the future from an investment. It is computed by adding up the values obtained after multiplying each outcome with its probability.

Cash flow:

The amount of cash and its equivalents transferred in and out of a business is termed as cash flow.

b.

Summary Introduction

To calculate: The CoV of each apartment complex.

Introduction:

Coefficient of variation ( CoV ):

It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

c.

Summary Introduction

To explain: The riskier apartment complex.

Introduction:

Coefficient of variation ( CoV ):

It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

Answer 6

Chapter 13, Problem 18P

a.

Summary Introduction

To calculate: The expected cash flow of each apartment complex.

Introduction:

Expected value:

Also known as mean, it is the value estimated or anticipated to be earned in the future from an investment. It is computed by adding up the values obtained after multiplying each outcome with its probability.

Cash flow:

The amount of cash and its equivalents transferred in and out of a business is termed as cash flow.

Answer 7

Chapter 13, Problem 18P

a.

Summary Introduction

To calculate: The expected cash flow of each apartment complex.

Introduction:

Expected value:

Also known as mean, it is the value estimated or anticipated to be earned in the future from an investment. It is computed by adding up the values obtained after multiplying each outcome with its probability.

Cash flow:

The amount of cash and its equivalents transferred in and out of a business is termed as cash flow.

Answer 8

b.

Summary Introduction

To calculate: The CoV of each apartment complex.

Introduction:

Coefficient of variation ( CoV ):

It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

Answer 9

b.

Summary Introduction

To calculate: The CoV of each apartment complex.

Introduction:

Coefficient of variation ( CoV ):

It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

Answer 10

c.

Summary Introduction

To explain: The riskier apartment complex.

Introduction:

Coefficient of variation ( CoV ):

It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

Answer 11

c.

Summary Introduction

To explain: The riskier apartment complex.

Introduction:

Coefficient of variation ( CoV ):

It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 13 - Prob. 1DQ Ch. 13 - Discuss the concept of risk and how it might be...Ch. 13 - When is the coefficient of variation a better...Ch. 13 - Explain how the concept of risk can be...Ch. 13 - If risk is to be analyzed in a qualitative way,...Ch. 13 - Assume a company, correlated with the economy, is...Ch. 13 - Assume a firm has several hundred possible...Ch. 13 - Explain the effect of the risk-return trade-off on...Ch. 13 - What is the purpose of using simulation analysis?...Ch. 13 - Assume you are risk-averse and have the following...

Solution Summary: The author explains the calculation of the expected cash flow of each apartment complex and the CoV of Crenshaw Village.

To calculate: The CoV of each apartment complex.

Introduction:

Coefficient of variation ( CoV ):

It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

To explain: The riskier apartment complex.

Introduction:

Coefficient of variation ( CoV ):

It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

Want to see the full answer?

Chapter 13 Solutions

Solution Summary: The author explains the calculation of the expected cash flow of each apartment complex and the CoV of Crenshaw Village.

To calculate: The CoV of each apartment complex. Introduction: Coefficient of variation ( CoV ): It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

To explain: The riskier apartment complex. Introduction: Coefficient of variation ( CoV ): It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

Want to see the full answer?

Chapter 13 Solutions

To calculate: The CoV of each apartment complex.

Introduction:

Coefficient of variation ( CoV ):

It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.

To explain: The riskier apartment complex.

Introduction:

Coefficient of variation ( CoV ):

It is the ratio of SD (standard deviation) to the mean that shows the extent of variability of data in relation to the mean of the population.