I have a project that asks what the standard deviation is for two machines that a company wants to invest in. When looking at the formula it is asking for the average rate of return and the actual rate of return and all i have to work with is cash flow amounts that the new machine will generate but they are in cash form. How do I find the return rates for the calculation?
I believe that someone else had asked this question a while back.
Calculate the standard deviation of the cash flows, not returns.