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Co-efficient of variation method For Risk And Uncertainty In Capital Budgeting

Co-efficient of variation method For Risk And Uncertainty In Capital Budgeting:

finance
[Post Image Courtesy of Yodiyim at FreeDigitalPhotos.net]

Co-efficient of variation is a relative measure of dispersion. It the projects here the same cost but different net present values, relatives measure, i.e., Co-efficient of variation should be risk induced. It can be calculated as:

Co-efficient of variation = Standard deviation/mean × 100

If the co-efficient of variation of project ‘X’ in more then that ‘Y’ project X in more risk. Hence, project Y should be selected.

About Author Mohamed Abu 'l-Gharaniq

when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries.

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