Concept explainers
a)
To determine:
Less risky project.
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)
To determine:
Lowest standard deviation.
Introduction:
The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.
c)
To determine:
Coefficient of variation.
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.
The coefficient of variation is an asset risk indicator that measures the relative dispersion. It describes the volatility of asset returns relative to its mean or expected return.
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EBK PRINCIPLES OF MANAGERIAL FINANCE
- Salalah company management is considering two competing investment Projects A and B.YearInitial Investment 12345Project A 8000 2750 2750 2750 2750 2750Project B 8000 3000 3000 3000 3000 3000DISCOUNT RATE 5.05%Q1) Use the information below and help the management in choosing the most desirable Project using all the following techniques:1) Payback Period Technique.2) Discounted Payback Period Technique.3) Net Present Value Technique4) Profitability Index Technique.Q2) Based on your solution or answer to question 1, comment as to which proposal is better and why?arrow_forwardSalalah company management is considering two competing investment Projects A and B.YearInitial Investment 12345Project A 8000 2750 2750 2750 2750 2750Project B 8000 3000 3000 3000 3000 3000DISCOUNT RATE 5.05%Q1) Use the information below and help the management in choosing the most desirable Project using all the following techniques:1) Payback Period Technique.2) Discounted Payback Period Technique.3) Net Present Value Technique4) Profitability Index Technique. Q2) Based on your solution or answer to question 1, comment as to which proposal is better and why?arrow_forwardC1 = 68100C2 =91200R = 45100 A ) Select the best project using Return on Investment ROI ( Rate of Return ) method the data of both projects are shown the table below. B ) Compare the effect of decrease in revenues of Annual revenues of 5 % on the rate of return for project Y ( calculate the % of change in ROI ).arrow_forward
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