Ask Question
BusinessBusiness
3 February, 02:15

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 Crenshaw Village Yearly Aftertax Yearly AftertaxCash inflow Cash inflow (in thousands) Probability (In thousands) Probability$70 0.2 $75 0.2$75 0.2 $80 0.3$90 0.2 $90 0.4$105 0.2 $100 0.1$110 0.2a. Find the expected cash flow from each apartment complex. b. What is the coefficient of variation for each apartment complex? c. which apartment complex has more risk?

+2
Answers (1)
  1. 3 February, 04:17
    0
    the Palmer Heights apartment has more risk

    Explanation:

    first we need to calculate the expected cash flow for each apartment:

    Palmer Heights: = 0.2*70+0.2*75+0.2*90+0.2*105+0.2*110

    =90

    Crenshaw Village: = 0.2*75+0.3*80+0.4*90+0.1*100

    =85

    then is necessary get the coefficient of variation:

    Palmer Heights: = sqrt (0.2 * (70-90) ^2+0.2 * (75-90) ^2+0.2 * (90-90) ^2+0.2 * (105-90) ^2+0.2 * (110-90) ^2) / 90

    =0.175682092

    Crenshaw Village:

    =sqrt (0.2 * (75-85) ^2+0.3 * (80-85) ^2+0.4 * (90-85) ^2+0.1 * (100-85) ^2) / 85

    =0.09112902

    3.

    the Palmer coefficient has a bigger value so we conclude that Palmer Heights has more risk
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Mr. Sam Golff desires to invest a portion of his assets in rental property. He has narrowed his choices down to two apartment complexes, ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
arla, the marketing manager at Regal Inc., is in the process of setting prices. She has finished analyzing the competitive price environment. According to the price-setting process, what should be Carla's immediate next step?
Answers (1)
A poll asked adults in a certain country whether immigration was a good thing or a bad thing for the country. out of 10871087 respondents, 395395 said it was a good thing. a.
Answers (1)
The PGA operates as two divisions: one that governs the club professionals who serve amateur players and another, known today as the PGA Tour, that governs the tour professionals, and schedules events such as the PGA Championship Tour, PGA Tour
Answers (1)
In the podcast, Manufacturing the Song of the Summer, the songs on Rihanna's album were written at a writing camp.
Answers (1)
Which of the following statements is true? A. A knowledge management system is based on a single technology to codify a database. B. Explicit knowledge assets reflect knowledge that cannot be documented. C.
Answers (1)
New Questions in Business
You plan to borrow $ 2 comma 000 from a bank. In exchange for $ 2 comma 000 today, you promise to pay $ 2 comma 100 in one year. What does the cash flow timeline look like from your perspective? What does it look like from the bank's perspective?
Answers (1)
Which of the following is indicative of a short-term restrictive financial policy? a) purchasing inventory only as needed b) granting credit to more customers c) increased investment in marketable securities d) maintaining a large accounts
Answers (2)
You are employed as an administrative staff member of a community healthcare office that just opened last month. you and your manager are working hard to advertise and expand the customer base.
Answers (1)
The following costs result from the production and sale of 4,450 drum sets manufactured by Tight Drums Company for the year ended December 31, 2019. The drum sets sell for $295 each. The company has a 30% income tax rate.
Answers (1)
The person who receives financial protection from a life insurance plan is called a what?
Answers (1)
Home » Business » 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.
Sign Up Forgot Password?