Determine the coefficient of variation for the following annual cash in flows from an investment project:
A) $624.50
B) 125.8
C) 0.201
D) cannot be determined

Question

Determine the coefficient of variation for the following annual cash in flows from an investment project: 
A) $624.50 
B) 125.8 
C) 0.201 
D) cannot be determined

Quizplus · Accepted Answer

Solution: R = $2,000 (0.10) + $2,500 (0.20) + $3,000 (0.30) + $3,500 (0.20)+ $4,000 (0.20) = $3,100 s = [(2000 - 3100)² (.10) + (2500 - 3100)² (.20) + (3000 - 3100)² (.30)+ (3500 - 3100)² (.20) + (4000 - 3100)(.20)].⁵= (390,000).⁵= $624.50 v = $624.50/$3100 = 0.201

Determine the Coefficient of Variation for the Following Annual Cash