Question

A construction company plans to invest in a building project. There is a 25% chance that the company will lose $40,000, a 35% chance of a break even, and a 40% chance of a $30,000 profit. Based on this information, what should the company do?
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A) The expected value is $2,000, so the company should proceed with the project.

B) The expected value is $22,000, so the company should proceed with the project.

C) The expected value is - $2,000, so the company should not proceed with the project.

D) The expected value is $-22,000, so the company should not proceed with the project.

Answer 1

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C) The expected value is - $2,000, so the company should not proceed with the project.