Chapter7Q03answer - Design 6 offers the highest returns but...

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Chapter 7 Question 3 b) Mean NPV Standard deviation Design (£0000) of NPV (£0000) 15 0 22 1 32 0 44 6 5 –49 31 66 0 3 2 2 9 8 3 0 0 5 10 15 20 25 30 35 -60 -40 -20 0 20 40 60 80 Mean NPV £0000 SD of NPV £0000 1 2 3 4 5 6 Assuming that the mean–standard screening procedure is valid, the above graph shows that
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Unformatted text preview: Design 6 offers the highest returns, but also has the highest level of risk. In contrast, design 2 offers the lowest returns, but also the lowest level of risk. Notably, design 1 offers more than double the expected returns of design 2 at the cost of only a slightly higher level of risk....
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This note was uploaded on 03/29/2010 for the course DMVS 324 taught by Professor Muller during the Spring '10 term at Stellenbosch University-South Africa.

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