Question: Atomic Blaster Bean Company is considering the purchase of one of bodacious bean burners "Hickory Honey" or "Bean-tastic burner." Both should provide a benefit over a 10 year period and each requires an investment of $450,000. Looking at the following table which includes estimates of rates of return, probabilities for pessimistic, most likely and optimistic results. Hickory Honey Bean-tastic Burner Investment Amount Probability Amount Probability $450,000 1.00 $450,000 1.00 Rate of Return Pessimistic 10% .10 7% .30 Likely 14% .70 14% .40 Optimistic 19% .20 21% .30
1) Range of rate of return
2) Expected Return?
3) Standard Deviation?
4) Best option?