The College Copy Shop is in the process of purchasing a high-tech copier. In its search, it has gathered the following information about two possible copiers A and B.
(a) Compute expected rate of return for each copier.
(b) Compute variance and standard deviation of rate of return for each copier.
(c) Which copier should they purchase?
(a) Compute expected rate of return for each copier.
(b) Compute variance and standard deviation of rate of return for each copier.
Expected value = 16.9% Expected value = 17.05%
Variance A = 17.48 Variance = 35.65
SD = 4.18% SD = 5.97%
(c) CV = SD / r
Copier A: CV = 4.18/16.90 = 0.25
Copier B: CV = 5.97/17.05 = 0.35
The College Copy Shop should buy copier A.
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