Question

Check my work The Oklahoma Pipeline Company projects the following pattern of inflows from an investment. The inflows are spread over time to reflect delayed benefits. Each year is independent of the others. Year 1 Cash Inflow Probability $ 65 0.20 0.60 0.20 Year 5 Cash Inflow Probability $ 50 0.25 0.50 110 0.25 Year 10 cash Inflow Probability $ 40 0.30 0.40 129 9.30 30 80 95 The expected value for all three years is $80. Compute the standard deviation for each of the three years. (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Standard Deviation Your 1 Year 5 Year 10 < Prev 31 - 40 Next >

Answer 1

Answer :

Standard Deviation calculations as follows :

B C D E F YEAR 1 PROBABILITY EXPECTED CF CASH INFLOW DEVIATIONS 80 0.2 0.6 0.2 48 191 80 951 EXPECTED VALUE STANDARD DEVIATION STANDARD DEVIATION 9.486832981 9.49 YEAR 5 PROBABILITY EXPECTED CF CASH INFLOW DEVIATIONS 225 0.25 0 2251 27.51 80 0.5 1101 0.251 EXPECTED VALUE STANDARD DEVIATION STANDARD DEVIATION 21.21320344 21.21 YEAR 10 PROBABILITY EXPECTED CF CASH INFLOW DEVIATIONS 480 0 480 80 32 120 36 80 EXPECTED VALUE STANDARD DEVIATION STANDARD DEVIATION 30.98386677| 3 0.98 I

E YEAR 1 CASH INFLOW | PROBABILITYI EXPECTED CF | DEVIATIONS lo2 =B4-04 |=C4*(B4-D7)^2 80 =B5*C5 =C5* (B5-07)^2 0.2 =B6 C6 =C6*(B6-D7)^2 EXPECTED VALUE SUM(D4:06) STANDARD DEVIATION =SUM(E4:E6)^(1/2) STANDARD DEVIATION 195 9.49 14 YEAR 5 CASH INFLOW PROBABILITY EXPECTED CFI DEVIATIONS 0.25 =B14-C14 =C14*(B14-D17)^2 80 0.5 =B15*C15 1=C15*(B15-D17)^2 110 0.25 =B16*C16 =C16*(B16-D17)^2 EXPECTED VALUE =SUM(D14:016) STANDARD DEVIATION =SUM(E14:E16)^(1/2 STANDARD DEVIATION 21.21 17 18 19 20 YEAR 10 CASH INFLOW PROBABILITY EXPECTED CF 40 0.3 =B24-024 80 0.4 =B25*C25 120 10.3 =B26*C26 EXPECTED VALUE SUM(D24:D26) STANDARD DEVIATION STANDARD DEVIATION DEVIATIONS =C24" (B24-D27)^2 =C25*(B25-D27)^2 =C26*(B26-D27)^2 =SUM(E24:E26)^(1/2 30.98