Risk analysis involving computation of cash flow

Reference no: EM1316434

Risk analysis involving computation of cash flow and coefficient of variation

Mr. Monty Terry, a real estate investor, is trying to decide between to potential small shopping center purchases. His choices are the Wrigley Village and Crosley Square. The anticipated annual cash inflows from each are as follows:

Wrigley Village Yearly After-tax Cash Inflow Crosley Square Yearly After-tax Cash Inflow

(In Thousands) Probability (In Thousands) Probability

$10 0.1 $20 0.1

30 0.2 30 0.3

40 0.3 35 0.4

50 0.3 50 0.2

a. Find the expected value of the cash flow from each shopping center.

b. What is the coefficient of variation for each shopping center?

c. Which shopping center has more risk?

Reference no: EM1316434

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