Calculate the best estimate of each asset

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Reference no: EM131903972

Sun Products Inc. must choose between two asset purchases. The annual rate of return and related probabilities given below summarize the firm analysis.

Asset A Asset B

Rate of Return Probability Rate of Return Probability

8% 20% 7% 20%

13% 60% 17% 60%

18% 20% 27% 20%

Required:

a. Calculate the best estimate of each asset: Asset A ______ Asset B _____

b. Calculate the standard deviation of each asset: Asset A ______ Asset B _____

c. Calculate the coefficient of variation of each asset: Asset A ______ Asset B _____

and comment on the relative risk of Asset A and Asset B. If Sun is risk averse, which asset does it’s management choose? ____________

Reference no: EM131903972

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