Question

a. Fill in the following table from Appendix B(Round your answers to 3 decimal places.) Discount Rate Years 6% 16% 10 20

Answer 1

A	B	C	D	E	F	G	H
2
3		a)
4		Assuming the discount rate r and period n, the present value factor can be calculated as follows:
5		Present value factor	=1/(1+r)n
6
7			Discount Rate
8		Years	6%	16%
9		1	0.943	0.862	=1/((1+E$8)^$C9)
10		10	0.558	0.227	=1/((1+E$8)^$C10)
11		20	0.312	0.051	=1/((1+E$8)^$C11)
12
13		a)
14
15			Expected Value	Standard Deviation
16		A	$2,470	$1,050
17		B	$2,170	$2,050
18		C	$1,870	$1,210
19
20		Coefficient of variation is the ratio of the standard variation to the mean.
21
22			Expected Value	Standard Deviation	Coefficient of variation
23		A	$2,470	$1,050	0.43	=E23/D23
24		B	$2,170	$2,050	0.94	=E24/D24
25		C	$1,870	$1,210	0.65	=E25/D25
26
27		Hence,
28			Coefficient of variation
29		A	0.43
30		B	0.94
31		C	0.65
32