Question

Problem 4 [Avec R Say that you are attempting to determine a valuation of three nascent start-up companies You ask your intern to attempt to come up with valuations while you do some historical rescarch. You look historically and find that there were 27 similar companies valued (in 1000s of dollars) 750, 60, 140, 1139, 149, 1700, 750, 1825, 1200,1200, 135, 2000, 75, 1100, 1250, 150, 1050, 750, 238, 410, 37, 600, 290,340, 1150, 115, 1576 Your intern prices the three companies at 1200, 2500, 4500. (a). Create a boxplot of the previous valuations data in R (b). How many of the three intern's valuations are within the inter-quartile range of previous valuations? (c). About how many did you expect for part (b) if these companies were exchangeable with the old companies?

Answer 1

(a) The boxplot is given below:

(b) The first quartile is 149.5 and third quartile is 1175.0. The interquartile range = 1175.0 - 149.5 = 1025.5. None of the 3 valuations are within the interquartile range of previous valuations.

(c) I expected 1200 to lie within the interquartile range and 2500 and 4500 to lie outside it, since 2500 and 4500 are outlier values, if we consider the whole of the given previous valuations data.