Table 10
$$\begin{array} { | l | l | l | l | l | }
\hline \text { First Cost, } \$ & \$ 60,000 & \$ 80,000 & \$ 100,000 & \$ 120,000 \
\hline \text { Probability } & 0.25 & 0.35 & 0.30 & 0.10 \
\hline
\end{array}$$
-Determine the associated risk measure in this equipment investment in terms of standard deviation.
A) $4,923
B) $6,123
C) $4437.8
D) $8,523

Question

Table 10
 $$\begin{array} { | l | l | l | l | l | } 
\hline \text { First Cost, } \$ & \$ 60,000 & \$ 80,000 & \$ 100,000 & \$ 120,000 \
\hline \text { Probability } & 0.25 & 0.35 & 0.30 & 0.10 \
\hline
\end{array}$$
-Determine the associated risk measure in this equipment investment in terms of standard deviation.
A) $4,923
B) $6,123
C) $4437.8
D) $8,523

Quizplus · Accepted Answer

The standard deviation is calculated using the formula for a discrete probability distribution. First, calculate the expected value (mean) of the costs, then find the variance by summing the squared differences from the mean weighted by their probabilities, and finally take the square root to find the standard deviation. The correct calculation results in approximately $4437.8.

Table 10 -Determine the Associated Risk Measure in This Equipment Investment in |