Question

You are considering investing in a project with the following possible outcomes: States Probability of Occurrence Investment Returns State 1: Economic boom 18% 20% State 2: Economic growth 42% 16% State 3: Economic decline 30% 3% State 4: Depression 10% -25%

Answer 1

Based on the given states, their probability of occurrence, and the investment returns, the expected return would be 8.72%.

What is the expected return for this investment?

This can be found by the formula:

= ∑ (Probability of occurrence x Investment returns if state occurs)

Solving gives:

= (18% x 20%) + (42% x 16%) + (30% x 3%) + (10% x -25%)

= 3.60 + 6.72 + 0.90 - 2.50

= 8.72%

Question:

Find the expected value of the investment.

Find out more on expected value at brainly.com/question/24305645.

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