The College Copy Shop is in 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 and b.
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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