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snow_lady [41]
3 years ago
14

A venture capitalist, willing to invest $1,000,000 , has three investments to choose from. The first investment, a software comp

any, has a 20% chance of returning $5,000,000 profit, a 50% chance of returning $1,000,000 profit, and a 30% chance of losing the $1,000,000 dollars. The second investment, a hardware company, has a 15% chance of returning $5,000,000 profit, a 35% chance of returning $4,000,000 profit, and a 50% chance of losing the $1,000,000 dollars. The third investment, a biotech company, has a 25% chance of returning $5,000,000 profit, a 5% chance of returning $3,000,000 profit, and a 70% chance of losing the $1,000,000 dollars. Find the expected value for each investment.
Business
1 answer:
Scrat [10]3 years ago
7 0

Answer:

Expected Values : 1st Investment = 1200000 ; 2nd Investment = 2000000 ; 3rd Investment = 7000000

Explanation:

Expected Value = Sum of  [(X Value) x (X Probability)]

E[X] = Σ [X.{P(X)}]  

1st Investment

X = 20% , 50% , 30%  ; P(X) = +5000000 , +10000000 , -  10000000

E(X) = 0.2 (5000000) + 0.5 (1000000) + 0.3 (-1000000)

= 1000000+ 500000 - 300000 = 1200000

2nd Investment

X =15% , 35% , 50% ; P(X) = +5000000 , +4000000 , -1000000

E(X) = 0.15 (5000000) + 0.35 (5000000) + 0.5 (-1000000)

= 750000 + 1750000 - 500000 = 2000000

3rd Investment

X = 0.25 , 0.05 , 0.70 ; P(X) = 5000000 , 3000000 , -1000000

E(X) = 0.25 (5000000) + 0.05 (3000000) + 0.70 (-1000000)

= 1250000 + 150000 - 700000 = 700000

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Last year Ann Arbor Corp had $250,000 of assets (which equals total invested capital), $305,000 of sales, $20,000 of net income,
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Answer:

8.32%

Explanation:

The computation of  cost reduction improve the ROE is shown below:-

For computing the increase in ROE first we need to follow some steps which is here below:-

Debt = capital × Debt

= $250,000 × 37.5%

= $93,750

Equity = Assets - Debt

= $250,000 - $93,750

= $156,250

New ROE = New Net income ÷ Equity

= $33,000 ÷ $156,250

= 21.12%

Old ROE = Old Net income ÷ Equity

= $20,000 ÷ $156,250

= 12.8%

Increase in ROE = New ROE- Old ROE

= 21.12% - 12.8%

= 8.32%

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3 years ago
With free trade, that is, assuming no tariff, the outputs produced by domestic and foreign producers would be:_______.
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The Correct 1 unit and 15 units are the outputs produced by domestic and foreign producers with free trade assuming there is no tariff.

<h3>What is a free trade?</h3>

This refers to an international business policies that occurs when goods and services can be bought and sold between countries without tariffs, quotas or other restrictions being applied.

This policy tends to increase the volume of international trade among member countries and also allow them to increase their specialization in their respective comparative advantages.

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Answer:

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Explanation:

During business research, the data collected during the survey can become very unusable due to errors arising from the factors listed above.

The problem of coverage arises when for instance an electronic survey is used to collect data from a sample population where 69% for instance, do not have access to a mobile phone or a computer.

Measurement problems during a survey speak to the ability to properly design a questionnaire in such a way that it elicits the right kinds of responses. This means asking the right questions so that the responses or answers are accurate. The irony of measurement error is that one's survey is useless if they got the questionnaire design wrong, regardless of whether or not the response rate was very high.

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