Question

Statement I: Capital budgeting is a cost-benefit analysis, and the calculations for both investments and cash...

Statement I: Capital budgeting is a cost-benefit analysis, and the calculations for both investments and cash flows are the same. Statement II: Capital budgeting is a cost-benefit analysis. Therefore, companies should be considering projects carefully to increase short-term revenues.

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An investor gives you the following three casino projects with information on their return and risk

Hotels Return Risk (σ)
A 17% 8%
B 27% 17%
C 56% 13%

Given the available information, you can calculate the coefficient of variation (CV), and you will choose the following casino project:

Group of answer choices

A

C

None of these

B

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Answer #1
i ii iii=ii/i
Hotels Return Risk (σ) CV
A 17% 8%                                0.47
B 27% 17%                                0.63
C 56% 13%                                0.23
Since CV of c is lowest therefore ans is C
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