Swift_Manufacturing

Swift Manufacturing must choose between two asset purchases.  The annual rate of return and the related probablities given in the table (below) summarizes the firm's analysis to this point.

                        Project 257                                            Project 432

         Rate of Return          Probability                          Rate of Return            Probability

          -10%                       .01                                     10%                          .05

           10                          .04                                      15                            .10

           20                          .05                                       20                             .10

          30                           .10                                       25                             .15

          40                           .15                                      30                               .20

          45                          .30                                      35                              .15

          50                           .15                                      40                             .10

         60                             .10                                    45                                 .10

         70                             .05                                     50                               .05

         80                               .04              

         100                             .01

For each project, compute:

1) The range of possible rates of return.

2) The expected value of return

3) The standard deviation of returns

4) The coefficient of variation of returns

b) Construct a bar chart of each distribution of rates of return

c) Which project would you consider less risky? Why?